Agency Agreement Potato by gjw11470


More Info
									Volume 1, Issue 2                                         August 2005

USDA REPORTS ‘05 ACREAGE REDUCTION                                          UNITED AND SIPCO JOIN
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:                                               Both sides view the agreement as a big
                                                                            step in helping truly unite Idaho potato
                                                                            growers in a common goal of
                                   UNITED POTATO GROWERS OF AMERICA
                                                                                   SPECIAL REPORT

 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 .

 Albert Wada                                UNITED’S PHASE TWO: CROP EVALUATION
 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

           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
          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.
          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-
                                                                                    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-
          to recognize that since its ture. United of Idaho overhead
                                         ’05                                        tract overages destined for the
          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

                                                                              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
                                       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.


                                                                                Idaho Falls, ID 83402
                                                                                6109 S. Yellowstone Hwy.

To top