Competitiveness of P.E.I. potato farms challenged

Competitiveness of P.E.I. potato farms challenged

As acres of potatoes started to be churned up from the red, iron-rich soil of Prince Edward Island in 2020, farmers were aware of where they stood, even before the accounting began.

Another year with drought conditions for many during the height of the growing season, with limited ability to mitigate, meant there were lower yields per acre.

Farmers who spoke with Atlantic Business Magazine are certain, given climate change, the hits from peak-season drought are going to be all the more common. The provincial government says with climate change the Island will, generally speaking, receive more precipitation in the winter and more chances for evaporation in the summer season, with the land more susceptible to drought between the heavier, if less frequent, rain events.

“Our prices last year were record levels, selling price. This year, they’re better than they were last year,” said P.E.I. potato board general manager Greg Donald, in a recent interview.

“But our crop was down because of the drought. In Central P.E.I., yields were down by as much as 35 per cent. So, it’s great to have a good demand and price, but if you don’t have volume because of the weather, it ain’t going to do you a whole lot of good,” he said.

With lower yields, P.E.I. was not Canada’s top potato producer in 2020.

Island farmers planted more acres than their Western peers (at 83,600 acres to Manitoba’s next-closest 71,500 acres), but Statistics Canada production numbers show per-acre yields were higher in Western Canada than on the Island (with P.E.I. landing at 25 per cent less per acre than Manitoba, and Alberta had still higher yields).

The East-West shift in Canadian potato production was forecast back in 2018, in a report by agriculture specialist Alexandrea Watters for the United States Department of Agriculture (USDA). And P.E.I. is expected to continue to take a back seat.

“Increased area planted in Alberta and Manitoba coupled with greater flexibility in responding to weather-related challenges point to prairie provinces emerging as Canada’s leading production area,” the USDA report stated.

Essential product

The comments were referred to in the Government of Prince Edward Island’s more recent economic impact study, released at the end of 2020. It looked at the overall value of the potato sector to the Island economy – including farms, but also the processing and related supply and service business.

Provincially, it stated, the sector “generated $1.35 billion in output” and raised Island GDP by over $527 million in 2016. It also contributed roughly $240 million in wages and nearly $49 million in taxes. Nationally, the sector was reported to have contributed about $785 million to Canada’s GDP.

P.E.I. was responsible for about 23 per cent of the country’s international potato exports on average from 2009 through 2018 (P.E.I. and Manitoba together accounted for roughly half of exports).

“In general, we do know that the potato industry is an important component of P.E.I.’s economy. This study was undertaken to advance our understanding,” said economist Ziad Ghaith, who completed the analysis as part of his role with government.

The latest report was reviewed by a support and advisory committee prior to being finalized and released.

The report noted potatoes are more important as an agricultural crop to P.E.I. than they are weighted in the agricultural sector of any other Canadian province.

“On average, between 2009 and 2018, potato represented 78 per cent of total P.E.I. crop cash receipts, while it represented seven per cent and three per cent of Manitoba and Alberta’s total crop cash receipts,” the study stated.

High-capacity wells a heated topic

P.E.I. had 182 farms classified as potato farms in 2019. They are overwhelmingly family farms.

Brothers Bryan and Kyle Maynard are two farm co-owners in Summerside, who stepped into the family business at a young age. Their father died in an industrial accident (with equipment contact with an electrical line) when the brothers were eight and 10 years old. They were in their early 30s when their grandfather was diagnosed with dementia and unable to continue working the farm. The young men had some decisions to make.

“Trust me, there’s lots of days you kind of wonder why … But more often than not- there’s more days that you’re glad that you took the plunge into ownership,” Bryan Maynard said, in a recent interview.

Currently about 60 per cent of potatoes produced on P.E.I. overall go to processing (into chips, frozen French fries and other products), while about 25 per cent go to the fresh market and 15 per cent for the seed market.

The Maynards’ FarmBoys Inc. operation grows mostly potatoes (estimating potatoes to be about 90 per cent of revenue or more) and mostly for processing. That said, the Maynards made a point to say they’re not a universal example of a P.E.I. potato farm – some farms have different products, some are doing better than others, or received more rain.

But they do believe the availability of water – now and into the future – is key for their operation, and a common topic of conversation for P.E.I. farmers.

The discussion centres on the Island’s standing moratorium against high-capacity wells for agricultural irrigation.

“Basically, the last three summers were full-out drought conditions or very dry and I’m not sure how much more the industry can handle. We need access to water,” Bryan Maynard said.

“There’s lots that we can do other than irrigation (to improve yield) but we’re already doing that,” he said.

The brothers said farmers in other provinces might look to expand their acreage, or try to develop new and potentially higher-yielding acreage, but the Island has its limits.

“I think the concern looking down the road is when you see these drying weather patterns starting and you see these average yields starting to go down and costs of inputs going up, those increasing costs and decreases in yield aren’t sustainable in any business, let alone one where the profit margins are fairly thin to begin with,” Kyle Maynard said.

The potato board and secondary producer Cavendish Farms made a formal request in 2013 for the ban on high-capacity wells to be lifted.

Proponents of a ban continue to point to the Island’s overall reliance on groundwater.

“P.E.I. is one of only a small number of places entirely dependent upon groundwater. This makes P.E.I. unique and also vulnerable to any disturbance in the ecosystem,” stated chair of the Coalition for the Protection of P.E.I. Water, Catherine O’Brien, in a detailed presentation to the responsible legislative committee in October 2020.

Those pro-moratorium, including the coalition, highlight the idea there are limits in how far industrial farming can go on P.E.I., pressing for the well issue to be part of a broader discussion on limits and sustainable agriculture.

The last high-capacity well for farming purposes was added on P.E.I. in 2001 and there are 36 in all that pre-date the moratorium as it stands today. At the same time, there is no ban on such wells for other sectors and, apart from 87 for municipal water supplies, there are 13 for private water supplies (from individual property to Parks Canada supplies), 78 in place for aquaculture, 50 for commercial properties (including an inn, mushroom producer and swimming pool), 18 for irrigation largely for golf courses (with one for a soccer association) and 26 that are heating-related or for fire protection.

Agricultural irrigation currently accounts for 2.2 per cent of P.E.I.’s fresh groundwater use, including high-capacity wells along with water for other wells and irrigation ponds.

Processor working at both ends

The majority of the Island’s processing potatoes (versus grocery bags or seed) are sold to Cavendish Farms Corporation. That company was started by the Irving Group in 1980, after the purchase of a processing plant on the Island. Cavendish built a second plant and expanded in other parts of North America.

And along with investments in cold storage, the company has fully funded a new potato research centre, valued at $12.5 million, opened in New Annan in September 2020. In six greenhouses at the research centre, the company is working on potato varieties and breeding for traits such as superior yields specifically in P.E.I. soil.

“Our goal is to help address the specific challenges faced by growers here on Prince Edward Island,” said Robert Irving, Cavendish Farms president, according to a release on the opening.

It’s something in his control.

Irving has also appeared before a committee of the provincial legislature, calling for an end to the moratorium on high-capacity wells. As reported by The Guardian (Saltwire Network), at a Greater Charlottetown Area Chamber of Commerce annual meeting in 2018, he addressed what he argued is a clear need for more irrigation options for Island agriculture and reduce the need to import potatoes from Alberta, North Dakota, Manitoba and New Brunswick to meet processing demands. He said that was the situation after below-average yields in 2017. 

At the potato board, Greg Donald is certainly pro-well. But whatever happens with the water issue, Donald said the plan is to continue to build on the already existing reputation for P.E.I. potatoes through quality, and push for the highest-premium product, while pursuing research that will allow farmers to improve their outputs in the long-term.

“We know we can’t compete long-term with places that have vast land, low-cost sort of scenarios. It’s a challenge here, so we have to be different,” he said, in a strategy right now that will in essence boil down to quality over quantity.

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