The podcast discusses the Maine Potato War of 1976, where deep-pocketed Western potato kingpins waged a battle in the futures market to control the potato market. This war led to the decline of Maine's potato industry and influenced the type of potatoes we eat today. The podcast explores the tactics employed by potato farmers and traders, the role of commodities markets, and the aftermath of the war. It also touches on the state of Maine as a 'harvest land' famous for its potatoes and discusses ideas for improving the economy.
The Maine Potato War of 1976 was a battle between Western and Maine potato growers for economic control of the potato market in the US, resulting in the delisting of Maine potato futures.
The main potato war highlighted the importance of the commodities market, specifically the futures market, for potato farmers, providing a platform for price discovery and risk reduction through hedging.
Deep dives
The Maine potato war of 1976
The Maine potato war of 1976 was a battle between Western potato growers and Maine potato growers for economic control of the potato market in the United States. Idaho's potato kingpin, J.R. Simplot, and another Western potato magnate, Pete Tigaras, sought to challenge the dominance of the New York Mercantile Exchange, where only Maine potatoes were traded. They opened a million-dollar trading account to trade Maine potato futures, hoping to undermine the market and replace Maine potatoes with Western Russets. However, the plan backfired as they failed to deliver the massive amounts of Maine potatoes they had bet on, damaging confidence in the futures market and forcing the delisting of Maine potato futures.
The impact of the potato futures market
The main potato war highlighted the importance of the commodities market, specifically the futures market, in the potato industry. The main potato futures allowed growers to sell future potatoes, locking in prices and reducing risk. Hedging was crucial for potato farmers, providing insurance against price fluctuations. The market served as a platform for price discovery, matching potato growers and buyers based on anticipated supply and demand. However, the main potato war caused a loss of confidence in the futures market, leading to its decline and subsequent delisting of Maine potato futures.
Consequences for Maine potato growers
The delisting of Maine potato futures had significant consequences for Maine potato growers. Without the ability to hedge and reduce risk, farmers were left vulnerable to market fluctuations, making farming a riskier venture. They lost the advantage of locking in high prices and protecting against a bad market. Although Maine still produces potatoes, the loss of the futures market limited their ability to compete with larger companies like the J.R. Simplot company, which became even more powerful following the main potato war. The impact of the main potato war on Maine's potato industry remains significant decades later.
When you think of a potato, one state probably comes to mind: Idaho. But for much of American history, Maine was home to the nation's largest potato crop.
That status had changed by the 1970s, with the West growing more and more of the nation's potatoes. But Maine still had one distinct advantage: A privileged position in the commodities market. The New York Mercantile Exchange, one of the largest such marketplaces in the country, exclusively dealt in Maine potatoes. And two deep-pocketed Western potato kingpins weren't happy about it.
So the Westerners waged what's now called the Maine Potato War of 1976. Their battlefield was the futures market: A special type of marketplace, made up of hordes of screaming traders, where potatoes can be bought and sold before they're even planted.
The Westerners did something so bold – and so unexpected – that it brought not only the potato market, but the entire New York commodities exchange, to its knees.
Today on the show, how a war waged through futures contracts influenced the kind of potatoes we eat.
This episode was hosted by Dylan Sloan and Nick Fountain. This episode was produced by Sam Yellowhorse Kesler with help from Emma Peaslee. It was edited by Molly Messick, engineered by Valentina Rodríguez Sánchez, and fact checked by Sierra Juarez. Our executive producer is Alex Goldmark.