Why are potato chips still so expensive?

Yahoo

04-03-2025

In recent years, an increasing number of consumers have been abandoning their favorite brand-name potato chips for cheaper, generic options. That's because chip prices are on the rise, primarily due to inflation (one could call it 'potato-flation,' even) and extreme weather.
Last July, Matt Phillips of Sherwood News reported that 'prices for a 16-ounce bag of chips are up 30.6% since the end of 2020, outpacing the 20.6% increase in the consumer price index.' That's roughly 'a decade to 15 years worth of price increases in around three years,' Phillips added, considering that price increases for potato chips 'have typically been between 1%-2% a year.'
'Shoppers are no longer willing to swallow high prices for brand-name potato chips, and salty snack makers are loath to roll back the highly profitable price increases of recent years,' Phillips wrote in a report titled 'High-priced potato chips are ticking off Americans.'
That trend prevails in the new year as potato chip prices continue to skyrocket nationwide. Ten years ago, the average price for a 16-ounce bag of chips was $4.27, according to the U.S. Bureau of Labor Statistics. By the end of 2024, it was $6.32. The price hikes are, in part, due to inflation. Per the U.S. Department of Agriculture (USDA), the all-items Consumer Price Index (CPI) for food increased 0.6% from December 2024 to January 2025. And food prices, overall, were up 2.5% in January 2025 compared to last year. But climate change is also a factor in driving the high cost of potatoes.
As of 2024, Idaho (which produced 32% of the crop, according to Potato News Today) and Washington (which produced 24% of the crop) remain the top two potato-producing states in the country. However, warmer weather has been threatening potato production in both states. Idaho experienced its third warmest year on record in 2024, while Washington had its 15th warmest year, according to The Cool Down, an online news source covering all things climate and sustainability.
The impact of rising temperatures on the snack industry is best seen in Pennsylvania, where there are 'more potato chip factories than any other state in the Union,' Nathan Tallman, CEO of the Pennsylvania Cooperative Potato Growers, told The Allegheny Front. Unlike Idaho and Washington, Pennsylvania does not produce the bulk of potatoes in the U.S. But chip-makers based in the state prefer getting the crop from local farmers, especially in the wake of inflation and high transportation costs.
'It's cheaper to ship potatoes from farms in Pennsylvania to, say, Hanover [Snyder's of Hanover snack company, based in Pennsylvania] versus coming from Florida, Michigan or Alliston, Ontario,' Tallman explained.
Pennsylvania experienced its warmest year on record in 2024, meaning potatoes were also difficult to grow. Potatoes grow best in cool weather, when soil temperatures are between 60 to 65 degrees Fahrenheit during the day. They'll stop growing completely if the soil reaches 85 degrees. According to the Pennsylvania State Climatologist at Penn State University, daytime temperatures in Pennsylvania have been at 85 degrees or above in recent decades in many parts of the state.'If the climate is changing, and changing kind of rapidly, we have to develop potatoes that are adapted to the new climate,' Walter DeJong, a professor at Cornell University, told The Allegheny Front. DeJong added that it's not sustainable for Pennsylvania chip-makers to rely on potatoes from Florida and the northwest.
'Do they have the water to sustainably use to grow all those potatoes indefinitely out West?' he asked. 'I think the answer to that is 'no.' There's increasing water use issues in the West.'
In the wake of rising potato chip prices, more consumers have been turning to private-label, less-expensive store brand options. The New York Times reported back in October 2023 that 'private-label foods and beverages have crept up to a 20.6 % share of grocery dollars from 18.7% before the pandemic,' citing market research from Circana.
Potato chips are just another food item that inflation-weary consumers are either abandoning or seeking cheaper alternatives for. Consumers did the same with fast food which led to several chains, including McDonald's, Burger King and Wendy's to release their own rendition of value meals.