Potato Prices Explained

Potato prices climbed as demand remained positive at consumer and retail levels. Inventories continue to tighten but enough to support demand while waiting for the availability of new season varieties.

On the supply side, crop varieties are progressing well despite the high summer temperatures. China, the U.S., and India posted improved production outlook. Experts predicted that the commodity’s price remains optimistic as retail marketing drives potato prices, particularly the sweet varieties.

Why are potato prices fluctuating?

1. Weather Condition

Potato crops are sensitive to weather conditions such as droughts, floods, and frost. These conditions can damage crops and lead to lower yields, pushing potato prices up.

A study by the University of Minnesota found that a one-degree Celsius increase in temperature can reduce potato yields by up to 10%. For example, the Asian heatwave this year prompted the Chinese government to issue an agricultural warning to its farmers to secure their rice, cotton, and potato crops.

2. Imports and Exports

The global potato market is highly interconnected. Changes in import and export policies affect the supply and price of potatoes in a particular country which leads to price fluctuations. For instance, the imposed U.S. tariffs on imported potatoes from China and Russia (the first and fifth largest potato producers) resulted in a decreased potato supply in the country and its allied countries.

However, the commerce meeting between China and the U.S. might be a commodity price stabilizer as the two countries agree to discuss export restrictions, hoping to bridge stability as they contribute greatly to the global economic chain.

3. Demand

The demand for potatoes also fluctuates due to several factors such as changes in consumer preferences, economic conditions, and the availability of substitutes.

For instance, the rise of processed foods, potatoes’ good dietary characteristics, and the shortage of rice production due to extreme weather events make them an excellent substitute for rice and other staple foods. Thus, this determines potato price variation.

4. Production Costs

The cost of seeds, fertilizer, labor, storage, machinery, and transportation are the top considerations of potato prices. When the production cost is high, potato prices will increase as growers need to recover costs to make a profit.

Which variables impact the price of potatoes?

• Weather Condition
• Imports and Exports
• Demand 
• Production Costs
• Global Trade
• Government Policies

Where does potato come from?

The potato is a starchy crop.

Southern Peru and northwestern Bolivia first domesticated potato as a vegetable between 8000 and 5000 BCE (Before the Common Era). The Incas in South America were the first to cultivate potatoes on a large scale as early as 1,800 years ago.

They developed a sophisticated system of potato farming such as terracing, irrigation, and crop rotation. Potatoes were an important part of the Inca diet and the natives used it as their currency.

The arrival of the Spanish invaders in the Inca tribe in the second half of the 16th century began the spread of potatoes across Europe. First, it became a major crop in Ireland and Germany by the end of the 17th century, and by the end of the 18th century, it was a major crop in continental Europe.

Potato is a cool-season crop and its planting and harvest season depends on its growing location and weather pattern. However, the optimal growing conditions for potatoes are a cool, moist climate with well-drained soil.

Generally, potato planting season falls in the spring or fall, when the soil temperature is cool and moist. In warmer climates, winter is the best time for growing potatoes.

As a staple food, it is a good source of carbohydrates, dietary fiber, and potassium. Additionally, it can be cooked and served in many different ways. Today, our favorite potato fries generally come from these top-producing countries:

• China
• India
• Ukraine
• The United States
• Russia

What is the future price of potatoes?

Potato prices surged at the start of this year as most producing countries haven’t recovered from the extreme weather temperatures. Additionally, the North American region sees acreage decline for 4 consecutive years, leading to its reduced supplies.

On the consumption side, the rise of health-conscious practices leads to the popularity of nutrient-rich potato types, particularly sweet potato varieties. The food industry has increased its application as it contains high fiber, vitamins, and antioxidants. Furthermore, the commodity’s availability largely depends on the changing weather systems. 

Overall, the price of this third most important crop in the world after rice and wheat remains elevated due to the increasing demand for frozen potatoes and the weather. Growers, suppliers, and manufacturers will enjoy a not-so-profitable $26.68 potato price in 2030, a 14.29% increase from the current price.