Business: Potato Flurry

In U. S. potato markets last week there was as merry a flurry as any speculator could desire. For weeks potato prices have been skyrocketing on news of the greatest potato shortage since 1919. Not only are potatoes scarce but yellow turnips, the usual substitute, are practically impossible to buy either in the U. S. or Canada. A year ago old-crop potatoes retailed as low as 75¢ per 100-lb. bag and new potatoes were $2 and $3 per bbl. At the beginning of last week, 100-lb. bags of old potatoes were selling for more than $4.25 and prime tubers of the new crop were up to $7.50 or more per bbl.*

To poverty-stricken farmers in all 48 States, this boom meant undreamed of profits. A barrel of potatoes costs about $2 to grow, another 75¢^ to dig, pack, ship. Prices were so low on the Eastern Shore last year that desperate farmers hijacked and destroyed truckloads of other growers’ potatoes going to market. In Maine, No. 1 U. S. potato State, where a 165-lb. barrel last year sold at the warehouse for as little as 10¢, some 10,000 carloads were dumped into swamps. This was the situation that led Congress to pass the famed Warren Potato Control Act.

Not the New Deal but economics and weather saved the potato farmers’ shirts. Having taken it on the chin so badly in 1935, growers naturally planted fewer potatoes for 1936. On top of curtailed planting came late killing frosts in the North. In the Southeast a two-month drought has done more than legislation could ever do. Fortnight ago, potato conditions in Georgia were so bad that Governor Eugene Talmadge, a sizable potato grower himself, commanded: “Tell all the preachers to have meetings Sunday afternoon at three o’clock to pray for rain.”

In Virginia first diggings fortnight ago showed the tubers to be so small that the Department of Agriculture was asked to reduce minimum Government standards for No. 1 grade potatoes from 1⅞ in. in diameter to 1½ in., which would make No.1 grade equivalent to what Nos. 2 & 3 were last year. Crop damage cut the period of Florida shipments, which began in March, from the usual two months to five weeks. The flow from South Carolina stopped fortnight ago after moving only half as long as usual. The Department of Agriculture has not yet estimated this year’s crop but last week it predicted that the early crop would be 12% below 1935. 27% below the average for the last five years.

For the first time in the memory of West Coast produce dealers, spring potatoes are moving as far east as Manhattan. Farmers of California’s famed Shafter area, which is producing virtually all new Western potatoes at the moment, will gross some $8,000,000 from 9,000 acres—more than the entire California crop from 45,000 acres brought last year.

As prices climbed last week, potatoes began to appear from unsuspected quarters. In Manhattan heavy shipments from North Carolina helped send old crop quotations crashing from $4.40 per bag to $3.50. New potatoes tumbled from $7.75 per bbl. to $5.50. Speculating in potatoes is ticklish business because there is no potato futures market, and operators find it hard to unload in a hurry. In last week’s flurry a number of speculators were caught with their hands full of hot potatoes. And cool week-end rains in the East did not add to their comfort.

*WhoIesalers generally quote old potatoes in 100-lb. bags, new potatoes in 165-lb. barrels. Retail, a 5-lb. bag of new potatoes now costs 29¢ as against 7¢ a year ago.