Knowledge Exchange

Ag Economy

Vegetables

  • The Northeast experienced significant drought, particularly in New England, where some areas saw severe or extreme drought, according to the USDA. While most vegetable growers have adequate irrigation resources, the drought still caused stress to crops and additional work for producers.
  • Growers primarily selling to grocery stores have seen strong sales, while those who previously sold mainly to restaurants or foodservice distributors have had to adjust their marketing.
  • For growers selling direct-to-consumer, the impact of COVID-19 has been variable. Demand from consumers for local produce has been strong, and some CSA farms reported their strongest year ever. However, operators of farm stands and farmers’ markets have had to make significant adjustments to deal with the pandemic, and sales have varied. In many cases, operators who adapted their direct-to-consumer business model realized a significant improvement to gross and net profit margins.
  • Vegetable processors in New York are at capacity, demand has picked up as home cooking has utilized more frozen and canned vegetables. The industry continues to consolidate, with no new players entering the market. Processors are reluctant to place extra capacity as market decline had been steady prior to 2020. Growers of sweet corn, snap beans and peas usually have soybeans and corn as an alternative and will shift to commodity grain if processors remain at 2020 pricing. The recent rise in commodity grain pricing will place pressure on the price in 2021 for Sweet corn, snaps and peas. Beets in Western NY have good demand growth with LUV beets.
  • Keeping workers healthy has posed significant challenges, especially for farms with worker housing.
  • The availability and cost of labor remains a significant challenge for the sector. Initial concerns about the availability of H-2A workers were largely resolved, but both minimum wage and the Adverse Effect Wage Rate for H-2A increased significantly in many Northeast states. Growers have had to closely monitor their labor costs and try to gain efficiencies in order to remain profitable.

Potatoes

  • The growing season in Maine was one of the driest on record. September rains failed to materialize and a series of frosts in late September brought the growing season to an earlier-than-expected end. Dry conditions persisted during the early part of harvest but allowed most growers to finish harvest ahead of schedule. Yields vary widely across the region and are reportedly down 20-40% from last year, although some irrigated acreage produced above-average yields.
  • All market segments are seeing strong demand for potatoes, with prices above last year, although some slight downward price pressure is currently occurring in the post-holiday period. Contracted production slated for French fries are returning better prices per cwt due to improved quality from last year, despite the smaller crop. Tablestock markets in Maine also remain strong with prices $1-$4 per cwt above last year, depending on variety. Production slated for the chipstock markets is being delivered exclusively on contract, as the reduced overall yields will limit the need for open sales. Seed potato markets also remain strong due to reduced overall supply and acreage cuts in other growing areas. Seed supplies are expected to be extremely tight heading into the 2021 growing season and growers are having to look to other seed growing areas to supply a portion of their seed needs for next year.
  • Western New York potato growers which service the chip industry are consolidating in numbers, as new storage technology has emerged which results in a better end product. This costly venture is eliminating some of the smaller or more leveraged operators out of the business as they cannot afford the upgrades.