Joint venture means 'more balanced' flow of potatoes into the fresh market
Joint venture means 'more balanced' flow of potatoes into the fresh market
United Potato Growers of Idaho, a grower-owned cooperative formed in 2005 with a goal of bringing about a balance between supply and demand in the tomato market, has announced the formation of a joint venture with Idaho Fresh-Pak Corp. and the R.D. Offutt Co. that will create the nation's second-largest dehydrator.
Lewisville, ID-based Idaho Fresh-Pak, also known as Idahoan Foods, produces dehydrated and frozen potato products for retail and foodservice.
R.D. Offut Co. is "the largest potato grower in the country with dehydrated potato plants in Idaho, Nevada and North Dakota," according to a UPGI press release.
The merger creates "a broad network of potato processing plants with convenient access to markets and customers," the release stated. The new company has not yet been officially named.
"Under the terms of the agreement, United has formed United II, a new grower cooperative that will be involved in the [ownership of] the new company with Idahoan and Offutt. Idaho potato growers who are members of United or who join United, can opt to join United II. By investing in United II, potato growers will have ownership in the new company, will receive dividends and will have a guaranteed market for their dehy-grade potatoes," the release stated.
"This gives potato growers an additional tool to be able to balance fresh supply with fresh demand," said Jerry Wright, president and chief executive officer of UPGI. "This whole deal came about more as an attempt to have an additional tool to better be able to manage fresh supplies than to ... try to take over the dehy market."
By vertically integrating, growers will be able to "get an additional return out of their dehy market, which is a definite plus," he said. "But it is really about trying to improve service in the fresh market and balance supply with demand."
Since its formation, "United has proven its ability to manage fresh potato supplies, meet and match demand, and improve grower returns," Mr. Wright said. "This new venture will not only lead to a more stable dehy industry but also serve as an important tool for growers to balance their fresh crop and fresh industry marketing pipelines, all with the objective of improving grower returns. As a result, potato growers, our communities and the entire industry will benefit."
As a harvested potato crop "gets run through the shed," sorted and packed, Mr. Wright explained, it often proves to be the case that "Mother Nature has blessed us with too much of one thing and not enough of another."
Grower involvement in the dehydration business will give growers "the ability now to selectively run the crop properly and flow it into the market rationally." It provides "opportunity to better balance supply with demand and always give retailers and consumers exactly what they want and need, but not oversupply the pipeline and lower prices." That should "provide stability in both the fresh market and the dehy market ... rather than the erratic boom- and-bust cycles that typically have plagued this market," he said.
It is "probably the most positive thing that has happened to growers in 100 years here in this market," Mr. Wright continued.
Members of the newly formed United II will be the sole potato suppliers for the new company, Mr. Wright said.
At its inception, the new company will be the largest potato dehydration operation in the country, "and we anticipate additional partners [in the dehydration industry] coming in," he said.
Membership is open to all growers. Those growers who already have commitments to other dehydrators "are expected to honor the contracts they have," he said. But "we have provisions for growers who currently have such commitments to "work their way into equity membership" in the new company.
J.R. Simplot Co. will be the national foodservice sales arm for the new venture.
Lewisville, ID-based Idaho Fresh-Pak, also known as Idahoan Foods, produces dehydrated and frozen potato products for retail and foodservice.
R.D. Offut Co. is "the largest potato grower in the country with dehydrated potato plants in Idaho, Nevada and North Dakota," according to a UPGI press release.
The merger creates "a broad network of potato processing plants with convenient access to markets and customers," the release stated. The new company has not yet been officially named.
"Under the terms of the agreement, United has formed United II, a new grower cooperative that will be involved in the [ownership of] the new company with Idahoan and Offutt. Idaho potato growers who are members of United or who join United, can opt to join United II. By investing in United II, potato growers will have ownership in the new company, will receive dividends and will have a guaranteed market for their dehy-grade potatoes," the release stated.
"This gives potato growers an additional tool to be able to balance fresh supply with fresh demand," said Jerry Wright, president and chief executive officer of UPGI. "This whole deal came about more as an attempt to have an additional tool to better be able to manage fresh supplies than to ... try to take over the dehy market."
By vertically integrating, growers will be able to "get an additional return out of their dehy market, which is a definite plus," he said. "But it is really about trying to improve service in the fresh market and balance supply with demand."
Since its formation, "United has proven its ability to manage fresh potato supplies, meet and match demand, and improve grower returns," Mr. Wright said. "This new venture will not only lead to a more stable dehy industry but also serve as an important tool for growers to balance their fresh crop and fresh industry marketing pipelines, all with the objective of improving grower returns. As a result, potato growers, our communities and the entire industry will benefit."
As a harvested potato crop "gets run through the shed," sorted and packed, Mr. Wright explained, it often proves to be the case that "Mother Nature has blessed us with too much of one thing and not enough of another."
Grower involvement in the dehydration business will give growers "the ability now to selectively run the crop properly and flow it into the market rationally." It provides "opportunity to better balance supply with demand and always give retailers and consumers exactly what they want and need, but not oversupply the pipeline and lower prices." That should "provide stability in both the fresh market and the dehy market ... rather than the erratic boom- and-bust cycles that typically have plagued this market," he said.
It is "probably the most positive thing that has happened to growers in 100 years here in this market," Mr. Wright continued.
Members of the newly formed United II will be the sole potato suppliers for the new company, Mr. Wright said.
At its inception, the new company will be the largest potato dehydration operation in the country, "and we anticipate additional partners [in the dehydration industry] coming in," he said.
Membership is open to all growers. Those growers who already have commitments to other dehydrators "are expected to honor the contracts they have," he said. But "we have provisions for growers who currently have such commitments to "work their way into equity membership" in the new company.
J.R. Simplot Co. will be the national foodservice sales arm for the new venture.
