The U.S. Department of Agriculture agreed yesterday to bail out Idaho potato farmers who are drowing in a bumper crop of russets, even though the rescue will cost American consumers up to $39 million.
The price of potatoes is expected to increase about a penny a pound as a result of the USDA decision to turn 9 million 100-pound bags of potatoes into cattle feed.
Taking the potatoes out of the supermarkets will cause the retail price to rise and will mean more money for potato growers, whose prices have been depressed by record yields, USDA officals said.
The Agriculture Department had already propped up the price of potatoes by nearly tripling its purchases for the school lunch program, buying 2.7 million hundredweight bags from this year's crop, compared with about a million bags last year.
Perfect potato-growing weather in Idaho's russet region caused yields there to jump from the usual 245 100 pound bags per acre to 266 pags per acre this year. Yields were up in most other potato-growing states as well, but Idaho russets flooded the market, driving down prices.
As a result, potato farmers are getting about 2 cents a pound for potatoes that last year brought an average of 3.2 cents per pound, said Cliff Osee, an aide to Assistant Secretary of Agriculture Carol Tucker Foreman.
Consumers have not benefited from the depressed price, he said, because "increases in costs between the farm gate and the consumer have absorbed the reduced price of the product."
But consumers will pay an additional $36 million to $39 million as a result of the decision to divert part of the potato crop from human to animal use, said another USDA official, John Simpson.
Simpson said the Agriculture Department will spend from $13 million to $17 million to subsidize use of pootatoes as cattle feed. Potatoes are worth only 30 to 50 cents per hundredweight as animal feed, but the USDA will pay another $2 a hundred to farmers who sell their surplus to cattle raisers.
Between the direct subsidies and the higher market prices resulting from reduced supplies, potato growers are expected to get an extra $75 million to $80 million for this year's crop, Simpson said.
The Idaho surplus became a political issue because of a conflict between growers and consumers.
Potato processors put pressure on House Agriculture Committee Chairman Thomas S. Foley (D-Wash.), whose district includes several large frozen french fry and instant potato factories.
Processors also asked the Council on Wage and Price Stability to block any price increase, contending it would contribute to inflation.
But the council stayed out of the debate and Foley did not oppose the USDA action after potato farmers said that processors and futures market speculators stood to make millions of dollars in profits if the price to farmers remained low.
The USDA spokesmen said the decision to subsidize diversion of potatoes to animal feed is not a commitment to support potato rpices in the future. "We're trying to stabilize the market at the farm gate level" because of the bumper corp, said Osee.
About 9 million of the record crop of 318.7 million hundredweight of potatoes will be used as cattle feed. Earlier, USDA approved limited purchases of potatoes from growers in Arrostock County, Maine, Where there was also a bumper crop.
The russet potatoes to be fed to cattle in Idaho are the tan-skinned baking potatoes that usually bring higher prices than other varieties. Locally, potatoes have been selling for $1.29 to $1.39 per 10-pound bag, a USDA official said. Farmers get about 20 cents of that.