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Winnipeg Free Press - PRINT EDITION

Sober outlook faces potato producers

McCain lays off 10% of Portage workforce, cuts price offered to farmers

By: Martin Cash

Posted: 05/8/2010 1:00 AM | Comments: 0 (including replies)

McCain Foods is laying off about 10 per cent of its workforce in Portage la Prairie this fall and Manitoba potato producers are expecting a leaner crop year.

About 40 people out of a workforce of about 400 at McCain's in Portage are expected to be laid off.

Potato production in Manitoba

Number of acres seeded:

1999 -- 74,000

2000 -- 78,000

2001 -- 78,500

2002 -- 88,000

2003 -- 103,000

2004 -- 96,000

2005 -- 86,000

2006 -- 81,500

2007 -- 85,000

2008 -- 82,000

2009 -- 79,000

2010 -- 72,000 (forecast)

Company and industry officials say the layoffs are a result of declining french-fry demand which is also leading to lower prices and lower volumes for producers.

Potato producers were to meet Friday evening in Portage la Prairie to discuss the latest contract offer from McCain after two earlier proposals were rejected.

Garry Sloik, executive director of Keystone Vegetable Producers Association, said the strong Canadian dollar and softening consumer demand are driving down prices that french-fry processors are prepared to pay as well as the volume of potatoes they are contracting from the producers.

Potato producers in Manitoba will plant about 72,000 acres this year, down from 79,000 last year. Peak production was in 2003 when producers planted about 103,000 acres of potatoes in Manitoba.

Sloik said this year processors are offering around $9.50 per 100 pounds of potatoes. Last year, they paid between $11 and $11.50 per 100 pounds.

Calla Farn, a spokeswoman for McCain Foods at its Florenceville, N.B., offices, said the layoffs at its Portage la Prairie plant represent the elimination of one shift.

"We are experiencing challenges in the export market because of the lower cost of raw potatoes in Europe and a softening of consumer demand in the U.S.," she said. "The recession in the U.S. means people are not eating out as much as they were."

In addition to the Portage la Prairie plant, McCain owns another plant in Carberry that makes french fries exclusively for McDonald's Restaurants. It employs about 250 people. Simplot Foods also employs about 250 at its french-fry plant, also in Portage la Prairie.

Sloik said Simplot reduced its production in 2009, but McCain held off until this crop year. Sloik and Farn said the Carberry plant is not expecting layoffs.

There are about 85 potato producers in Manitoba and about 75 per cent of the provincial production it sold to the french fry producers. Sloik said the Old Dutch potato chip plant in Winnipeg is supplied by three producers.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition May 8, 2010 B6

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