J.R. Simplot Co. shocked growers in southern Idaho this week by announcing contract cutbacks for growers at its Heyburn, ID, fry processing plant.
The cutbacks were blamed on overproduction at the company’s seven Pacific Northwest plants.
The announcement has prompted Potato Growers of Idaho to issue a warning to growers yet to plant in the upper Snake River Valley that there could be overcapacity because of the fry contract cuts.
Growers in eastern Idaho will have to compete with growers in the Magic Valley who have already planted a big percentage of their crop.
Many growers will be left without bank financing which was predicated on having a contract in hand. Most of the joint venture and multi-year contract growers will not be affected.
Those affected will be growers who have gone year by year, trying to obtain what contracts they can.
While most of the “hit” is expected to be at the Heyburn plant, it will send reverberations throughout the Simplot production areas all the way to Moses Lake, WA. It is expected some of the lost acreage at the Heyburn plant will be picked up in Washington. This will make running the other plants cost-effective.
It was just about 10 days ago the Southern Idaho Potato Cooperative announced agreements with Simplot and other processors. It was an increase of 10 cents, bringing contracts to $4.20 per cwt.
Industry experts believe the cut contracts at Heyburn will equal about one million sacks, or about 2,500 acres.
“It upsets me [that the announcement came like it did]. Wouldn’t you think the company knew what it was going to do with these plants?” an industry observer said.
“I don’t have too much of a problem with a company doing that but the heartburn is they didn’t disclose to growers with enough advance warning. This time of year growers are committed on seed, they’ve fumigated their ground and put a lot of expense in the land for potato production,” he continued.
It has also been learned that Simplot has consolidated the management of its Aberdeen and Heyburn plants. Administrative layoffs have been made. One manager will now handle both plants.