Why potato farmers are stuck with billions of pounds of potatoes

• When COVID-19 closed down restaurants and hotels, potatoes headed toward food service had nowhere to go.
• It had a chain effect down to processors and growers, trapping 1.5 billion pounds of potatoes in the supply chain.
• While farmers across Idaho and Montana have given away millions of potatoes, they've also been forced to destroy millions more.
• Business Insider visited a potato seed farm in Sheridan, Montana, to understand the emotional and financial impact this has had on farmers Peggy and Bill Buyan.

Following is a transcript of the video.

Narrator: These potatoes aren't gonna end up on your dinner table. Their final destination is this hole. We're in the small town of Sheridan, Montana, on a potato farm. Normally this time of year, Bill and Peggy would be sending their potatoes to be planted. Instead, they're throwing away 700 tons.

Bill Buyan: The potatoes have been awful good to us for a lot of years, but this year it just really turned sour.

Narrator: And the same thing is happening across the Northwest.

Bill: I mean, it was just unprecedented. It's the supply chain from the growers to the supermarket that got interrupted.

Zak Miller: More than half of our market shut down by government mandate.

Narrator: Now farmers across Idaho and Montana are stuck with mountains of potatoes. So why did this all happen?

We visited Buyan Ranch, where Peggy and Bill have been growing potato seed for 59 years. Normally, potato production across the Northwest looks like this. It starts with a seed grower like Buyan, where farmers grow a variety of seed strains.

Zak: Virtually all the potatoes grown started out from a certified seed. That's a fairly rigorous process that avoids disease, imperfections.

Narrator: Buyan grows three different disease-free seed strains: Umatilla, Clearwater, and Russet Burbank potatoes. Each potato variety goes to a specific grower in either the fresh or processed segment. In the fresh segment...

Zak: You're actually seeing the potato in its true form.

Narrator: That's foods like a raw potato at a grocery store or au gratin potatoes at your favorite restaurant.

Zak: The other side of that is - we call it our process segment. You don't actually see the potato; you see the byproduct or the end result of that.

Narrator: That's the bag of potato chips, the french fries at McDonald's, or the precut fries in the frozen section.

Zak: If you're a fresh-product grower, you'll plant a different variety, or a different genetic line of potatoes. If you're a process grower, you'll grow a different product line. Just, some fry better, they have a better color to them. Others grow better.

Narrator: Now back to the farm. Potato growers get the seed from Buyan and start planting in March, then they harvest in early fall. Once the potatoes are out of the ground, they go into storage or are sent to a factory, where they're cleaned and turned into either fresh or processed potatoes.

Zak: When COVID hit, we had a huge run on retail, which lasted for about a week to two weeks, but then when we shut off all the restaurants, that's when everything came out of kilter.

Narrator: Potatoes for food service, like restaurants, hotels, and catering, make up an estimated 55% of all potato crops.

Zak: Think of everything from white-table restaurants clear down to your fast, quick service.

Narrator: So when food-service establishments shut down because of COVID-19, it was a chain effect. Processors cut down orders with growers. Out of options, the growers cut their orders with seed farmers. And more than half of the industry's potatoes were stranded on seed farms. In Peggy's case, her customers in Washington were cut back more than 50%, and she and Bill were stuck with tons of seed they'd normally sell.

Zak: You can't take some of these facilities that are built directly for food service and then tomorrow flip a switch and make them able to sell into retail. You're asking - a square peg in a round hole, I guess, is the best analogy I can come up with.

Narrator: The surplus potatoes also couldn't just be sent to grocery stores.

Zak: Grocery stores or retails would have been bursting to the seams with potatoes if we had redirected all that.

Bill: We had high hopes that maybe something would turn up, you know? That in a month or so, we might be able to send them somewhere for some kind of processing. But this year's, there's just no market for them, and we're just taking them out, taking them into a burial pit.

Narrator: Peggy and Bill have been forced to bury 1.4 million pounds of potatoes in total.

Bill: It's costing us money just to bury these. I mean, between our time and labor and renting a large excavator to dig the hole and cover them, I mean, it's not free just to throw them away to us. It's an expense just to get rid of them.

Peggy Buyan: When you dump that many potatoes, the financial hit, I mean, that was what's so heart-sickening, is the financial burden.

Zak: It takes a tremendous amount of capital to grow a crop of potatoes. Bankruptcies are starting to creep up.

Narrator: Before the pandemic, Zak estimates Idaho farmers were looking at a 15-year high in potato prices. Now they're facing a 20-year low. Zak says a 100-pound sack of potatoes went from costing about $12 a sack to $3 a sack, and a farmer needs it to cost at least $5 to break even. Peggy and Bill are facing $140,000 in losses. For farmers across Idaho and Montana, that number comes to $8 million.

Zak: Some of these farmers are looking at red all over their balance sheet, and there's no black to be seen. They'll be looking into increasing their lines of credit, they'll be needing to remortgage some of their property, you know, just trying to free up more capital to try and survive for next year.

Bill: When you put all your work and effort into growing them and the expense and the pride of what you grow, and then to just completely just throw it away and waste it.

Narrator: To save some of the potatoes from going to waste, Buyan Ranch got creative. Peggy and Bill have given out roughly 75,000 pounds of potatoes to the surrounding community.

Bill: She's organized two or three giveaway days, and we've had pickups from 100 miles away, people come and got potatoes. She's distributed them down on our street in town, just set up and people stop, they give them a bag of potatoes. And just to try to get somebody to benefit from them.

Zak: Even though they're losing money on them, they'd rather see someone eat them than nothing happen at all.

Narrator: Farmers are also mashing up potatoes into a compost-like mixture to feed cattle next year.

Peggy: We've put them into this pile and mixed straw, then we're gonna put plastic over the top of it and let it get totally broke down by next fall. But that point, if everything is OK and the rations, then we'll start feeding the calves with them. That's money out of our pocket, trying to find another use of the spuds.

Narrator: But all of that effort barely made a dent in the number of stranded potatoes.

Peggy: Right now it's, like, 200,000, roughly, in there, with everything, I would say. It's pretty devastating, you know? For a small operation, for us.

Narrator: All in all, an estimated 1.5 billion pounds of potatoes are trapped in the supply chain across the US.

Zak: If I was advising a year ago, not knowing what was gonna happen, I wouldn't have told them to do anything differently than they did now. If we'd have anticipated COVID wrong and had a short crop, a very small crop, it would have been devastating to food hunger. We'd have mass shortage of potatoes, and that would have been even worse.

Narrator: Luckily, Zak says all this food waste won't lead to a shortage next year. Farmers are still planting potatoes, just not as much.

Zak: Going forward this year, I think the farmers are doing the right thing.

Peggy: We thought, you know, let's plant what we do, take the risk.

Bill: We already had the ground prepared, and we raise most of our own seed and buy some, so, I mean, you might as well just carry on. I guess that's kind of the farm and ranch. In bad years, you just start over the next year and hope for a better, you know, better season. If you didn't, you'd have quit a long time ago.

Zak: But that's the plight of a farmer. We're always looking for next year. Farmers farm for the love of farming, and even in tough times, we still will continue to farm for the love of farming.