The Sultans of Spuds

Battered by their own success, farmers form the 'OPEC of Potatoes'

  • Harvesting potatoes in southern Colorado

    USDA
  • "We're so in love with what we're doing that when we get that smell of dirt in our nose, we just gotta go plant - and we don't worry about the market till later.” Albert Wada, chairman, UPGA board of directors

    COURTESY UNITED POTATO GROWERS OF AMERICA
  • Data from the Idaho Grower Returns Index, showing three decades of price fluctuations

    COURTESY UNITED POTATO GROWERS OF AMERICA
 

Once a month, usually on a Wednesday morning, about a dozen men arrive at the Salt Lake City airport on separate flights from around the country. They are whisked into waiting cars for the five-minute trip to a glass-fronted office building nearby. There, in an unpretentious conference room, they meet several more of their associates.

These men are the leaders of a little-known international cartel, and at meetings such as these, they fine-tune an elaborate system of production targets and quota transfers to control the price of the commodity around which their world revolves. It is a serious business, backed up with reconnaissance from satellites orbiting high above the Earth, and the organization's strict code of conduct allows for the use of what its members artfully refer to as "punitive measures" against anyone who violates the rules.

And, at lunchtime, the men always pause to sample their merchandise.

"We always serve potatoes. We always serve potatoes, whether it's chips or fried or mashed or whipped or salad," says Barb Shelley, one of a small cadre of people who carry out the organization's legwork. Not even lunch, it turns out, is safe from the group's intense scrutiny: "When we order from the caterer, we say, 'These are potato growers. We want your highest quality potatoes. Do not'" - Shelley pauses ominously - "'give us bad quality.'"

This may sound like a plot lifted straight out of a Mel Brooks movie, but the potato cartel is real. And its existence speaks volumes about the often-perverse dynamics of American agriculture.

Potato farmers have long been haunted by the market-destabilizing effects of what they refer to as "the pile" - the more than 40 billion pounds of spuds that they grow every year. They, like most American farmers, have a seemingly pathological compulsion to produce as much of their crop as is humanly possible. And when prices for a particular crop edge up, farmers often respond by growing more - flooding the market, driving prices down, and turning a one-year jackpot into several years of misery.

Potato farmers, in particular, have ridden that roller coaster for as long as most of them can remember, and it hasn't helped that per capita potato consumption in the U.S. has been steadily decreasing for at least 25 years. Their response has been the United Potato Growers of America, a sophisticated effort to regulate potato production and dampen the wild price swings that have plowed many a farmer into the ground. It's the kind of endeavor that seems sharply at odds with the popular image of the fusty spud.

"We're our own worst enemies," says Albert Wada, an Idaho farmer who helped dream up the confederation of local potato-grower cooperatives that most farmers now refer to as simply "United." "We're so in love with what we're doing that when we get that smell of dirt in our nose, we just gotta go plant - and we don't worry about the market till later."


After back-to-back bruising years that bottomed out in 2004 - when a potato farmer in Idaho got about $2.42 for growing a hundred pounds of potatoes - Wada and several other farmers decided something had to change.

"It's always been a fragmented bunch of growers who went out and did what their gut - or their horoscope, or their almanac - told them," says Wada. "It sounds trite, but it's true. We just had no strategy of supply being planned to match demand, and then supply-demand takes over - and then you're done."

The alternative was not an easy sell. Farmers, Wada says, have a tendency to see cooperatives as "a controlling, socialistic-type of administration - it kind of goes against the grain of free-market economics." And to be truly effective, the effort would have to span not only the many potato-growing areas in the U.S., but Canada as well - all of which are notorious for their inter-regional rivalries.

Normally, a coordinated effort by independent businesses to manage supply and control prices would violate federal antitrust laws, but a 1922 law gives farmer cooperatives the power to band together to market their products. So, early in 2005, Wada and several other growers started the United Potato Growers of America, which is essentially a confederation of state and regional co-ops.

Forming the confederation required overcoming "a lot of parochialism and market-share protectionism. You could smell burning rubber often," says Buzz Shahan, who is United's chief operating officer. "These are very strong guys that have been kicking people's butts since junior high. And to get them in a room and have them discuss market share and things like that" - Shahan searches for the right words - "it gets a little Western."


Yet it didn't take long for growers to recognize the value of adopting a more coordinated approach to potato production. Today, United has eight member chapters, representing growers in seven Western and five Midwestern states, and the group says its members account for about three-quarters of the 3,600 potato farmers and roughly million acres of potatoes grown in the U.S. (United's headquarters is in Salt Lake City, because, with almost no potato production, Utah is like the Switzerland of the Balkanized potato world.) In 2006, the group's founders helped organize the United Potato Growers of Canada.

This is by no means the first time that potato growers have tried to organize themselves. "Most of the prior efforts were: 'Let's find a government handout that will take some potatoes off the market that were already grown and in storage somewhere,' " says Jack Hetherington, who worked as a banker in Twin Falls, Idaho, for 33 years. "United was focused on changing the long-term supply dynamics, and that's done by controlling the acreage."