Volume 1, Issue 2 www.unitedpotato.com August 2005 USDA REPORTS ‘05 ACREAGE REDUCTION UNITED AND SIPCO JOIN RANKS The USDA crop reports released Tuesday, July 12, verified potato plantings have been significantly reduced for 2005. The At SIPCO’s July 15th all member report shows that fall acres were cut 7.2 percent or 69,400 meeting and at UNITED’s July 20th all acres, making the total acreage planted in the US for all seasons member meeting, both organizations 2005 crop the lowest since 1866. Thanks to your foresight and ratified board recommendations to unite participation, UNITED’s Acreage Bid Buy Down efforts both organizations with a Common contributed 36,400 acres or 54 percent of the fall acres cut. In Marketing Agency Agreement. The states where UNITED chapters were organized and functioning, agreement allows SIPCO to join United UNITED contributed almost 75 percent of the fresh acres cut. In as an independent district, while Idaho, UNITED was responsible for cutting at least 28,000 fresh maintaining its current leadership and acres. As the North American Potato Market News has infrastructure. reported, these ‘05 cuts are different than the past because they Together, the new UNITED/SIPCO are significantly concentrated in “fresh” acres. organization represents some 80 Our latest review of projected harvest, using trend line yields by percent of all the potatoes produced in state, and factoring in the total US acres cut, indicates the total Idaho, with SIPCO representing about US market will have approximately 27 million cwt fewer potatoes 80 percent of all the fry potatoes in the in ‘05 vs. ‘04, of which there will be at least 16 million cwt fewer state and UNITED 85 percent of the fresh potatoes than the ‘04 crop, including 10 million cwt less in fresh and seed potatoes. Terms of the Idaho. agreement authorized UNITED to help block and market SIPCO opens and contract overages destined for the fresh You can still join UNITED market. In return, SIPCO was United Fresh Potato Fresh Potato Growers of Idaho. appointed the exclusive marketing Growers of Idaho The membership application is available on our website or can agent for UNITED fry contract potatoes be sent to you by calling to processors. Both organizations will Idaho Falls Office Mike Leavitt (208) 535-8500. have representation on each others boards and key committees. 6109 S. Yellowstone Hwy. SIPCO growers also approved a fee Idaho Falls, ID 83402 increase, part of which will help fund UNITED UNITED’s supply management Office hours: 8 am to 5 pm CORPORATE programs. In return UNITED will pay a Phone: (208) 535-8500 check off on UNITED fry potatoes to Fax: (208) 535-8509 SPONSORS help fund the SIPCO negotiation effort. Email: email@example.com Both sides view the agreement as a big step in helping truly unite Idaho potato www.unitedpotato.com growers in a common goal of profitability. UNITED POTATO GROWERS OF AMERICA SPECIAL REPORT MESSAGE FROM THE CHAIRMAN Albert Wada Chairman of the Board I truly believe that it is the dawning of a “new day” for potato growers. I believe that UNITED is the right thing to do, at the right place, and at the right time. I know it has been said that farmers, especially potato farmers, have never been able to organize into an effective and lasting cooperative. That was then, this is now. We have an unprecedented opportunity to take control of our collective futures. As independent and entrepreneurial growers we are rugged individualists who brave the elements to raise a crop and put it out on the line every year in order to continue a way of life for ourselves and our families. We can still do this, but at the same time help guarantee ourselves that we have a much more stable and profitable future. UNITED has met with considerable success in its short life, and the cooperative is snowballing. UNITED has the leadership and critical mass across North America to succeed in the long run. But we need your support to help us all reach our full potential as 21st century business professionals who are managing our risks by intelligence and information. We can’t control the weather, but we can manage our coordinated production and marketing through being UNITED. Please call or e-mail me with your questions, concerns and suggestions regarding UNITED. I pledge to continue to work hard to bring our potato growing businesses stable profitability and into the 21st century business model UNITED is all about . Sincerely, Albert Wada UNITED’S PHASE TWO: CROP EVALUATION Email: firstname.lastname@example.org Phone: (208) 681-9232 All UNITED growers have been invited to participate in yield digs that will provide valuable crop progress information and yield predictions. This will help you and UNITED make informed key strategic supply decisions and adjustments prior to harvest. These yield surveys are part of UNITED’s three-phase Potato Supply Management Process. The first phase involved managing the number of acres planted through the Bid Buy Down program. The Second Phase of the process calls for monitoring of crop progress over time and accurate yield predictions before harvest. The process involves a series of three digs. In Idaho the first two digs are being done by the grower, and the third dig will be done by United fieldmen. Other UNITED organizations may do the survey differently. Even if the total crop production is reduced as much as anticipated, performing these surveys this year will give UNITED a good basis for future surveys and give UNITED a good idea of total crop size prior to the first USDA reports. The third phase involves supply management after harvest. Strategies includes removal of excess thru “contingency purchases”, USDA government bids, world feeding programs, export, and more. Page 2 VOL.1, ISSUE 2 — AUGUST 2005 MESSAGE FROM THE CEO Jerry Wright UNITED and SIPCO Join Ranks In the all member meeting held July 20th, the ‘05 budgets and check-off amounts were presented and discussed. There was unanimous agreement that, for a number of reasons, a percentage rate check-off would be more preferred by the membership rather than a flat rate. At SIPCO’s July 15 approved a Together, the new UNITED/ Accordingly, the UNITED Board has met andth all member change for the ’05 Crop year check-off meeting for at 2005 crop will amount and process. The check-off and theUNITED’s July be 3% of the gross sales. A fixed SIPCO organization represents for all member meeting, both against percent of all the check- percentage rate is a win-win 20theveryone; farmers are buffered some 80the risk of a fixedpota- off in a low price year and UNITED prospers in the good years along with the grower. organizations ratified board rec- toes produced in Idaho, with CHECK-OFF BREAKDOWN ommendations to unite both or- SIPCO representing about 80 The 3% of check-off against gross sales will be calculated for each grower settlement and thus will vary by lot of spuds ganizations with a Common Mar- percent of all the fry potatoes in Description and time of year. Assuming keting Agency Agreement. The ’04 ’05 ‘06 the state and UNITED 85 percent a $6.50 GRI on a specific agreement allows SIPCOPile join ’04 Contingency Contract to of the fresh and seed potatoes. 9.8¢ settlement, the check-off United as an independent dis- Terms of the agreement author- would be 19.5¢ per cwt. ’05 Acreage Buy Down trict, while maintaining its cur- 1.7¢ ize UNITED to help block and How will your money be used? First it is important rent United of America infrastruc- ’05 leadership and overhead market SIPCO opens and con- 1.5¢ to recognize that since its ture. United of Idaho overhead ’05 tract overages destined for the 2.3¢ inception, UNITED has fresh market. In return, SIPCO ’05 New USDA Packaging Line 1.0¢ been playing “catch-up”. Therefore, over half of the ’05 budget buffer 1.3¢ check-off pays for the ’04 Partial/initial ’06 Acreage Buy Down pymt. 1.9¢ Contingency Contract that successfully removed 3.2M Totals 9.8¢ 7.8 ¢ 1.9¢ cwt from the market and helped move the GRI in the last 4 months from $1.56 to +$3.40, and prevented carryover from the ’04 crop from destroying the fall ’05 crop prices. The remainder of the Remember, stay focused on your return! A $6.50 assessment is for ’05 programs that are in GRI, will be at least a $3.00 net improvement over place and already adding value and return the 2005 average. And your 19.5¢ check-off in for your ’05 crop. 2005 will give you a 1,538 percent return on investment. UNITED CORPORATE PRICE OUTLOOK GOOD SPONSORS The prospects for 05 fresh potato pricing and grower returns are very positive. If we match trend yields across the different growing regions nationally - a fact most consider optimistic given weather related planting delays - we are looking at the smallest crop in the last 15 years. We encourage all sellers throughout the fresh potato growing and distribution network to carefully consider these facts and forecasts as you prepare to market the new crop. We do not want to undersell this crop any more than we want to short key customers. Armed with facts, clear thinking and wise planning, we will be able to supply all key customers with ample product at competitive prices. Page 3 SIPCO LEADERSHIP UNITED WINS USDA BIDS CHANGES In May of 2005 UNITED of Idaho used a contingency contract to re- SIPCO growers elected a new slate move 3.2M cwt of excess potatoes from the fresh supply in Idaho. At of officers at their summer meeting. that time USDA announced the first of several long anticipated “bonus The new SIPCO president is Paul buy” bid offers as an effort to reduce the excess supply of potatoes Behrend, Aberdeen. He replaced from the 2004 crop. Since that time USDA has awarded several dehy outgoing president, Steve Reynolds. bids. On the first bid, totaling 14 million lbs of finished dehydrated The new vice president is Wes flakes, UNITED won 7million lbs. The winning bidder on the balance of the remaining 6-7M lbs of the bid was subsequently disqualified Wootan, Glenns Ferry. Jeff Harper, and the USDA has indicated intentions of re-biding that volume. Mountain Home, continues as secre- Meanwhile, additional USDA bids totaling 9.3 million lbs have been tary. The new SIPCO board con- awarded to UNITED. In fact, UNITED has won virtually every bid it sists of Wayne Bean, Ryan Cran- has made for production from the 2004 crop. USDA bids represent a ney, Mark Darrington, Tim Eames, key part of UNITED’s Potato Supply Management Strategy for balanc- Greg Nickel, Mike Schritter, and ing national and state supplies and removing excesses from the fresh Ritchey Toevs. United fry growers markets. are encouraged to contact SIPCO All the money UNITED makes on the USDA 2004 crop bids will go to Executive Director Dan Hargraves or reduce the obligation of all UNITED growers for contingency contract any of the board members with potatoes. All growers that sold contingency potatoes will receive the questions related to bargaining. same $2.00 per cwt for their potatoes regardless of their final disposi- Dan’s number is 241-0905. tion. AUGUST 2005 NEWSLETTER Idaho Falls, ID 83402 6109 S. Yellowstone Hwy.
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