Abstract: During the summer of 2001, the second year of a three year trial commenced at the Fredericton Potato Research Station to evaluate the benefits of organic mulch (hay) towards moisture conservation under irrigated and non-irrigated conditions. The sandy loam soils of the site used in this experiment are low in available water holding capacity, similar to soil conditions in southeast coastal areas of the province under potato production. The use of organic mulch following final hilling operations on shepody potatoes was measured for its moisture retention improvements and subsequent affect on yield. Mulch rates were 0.0, 2.25, 4.5 and 9.0 T/ha timothy hay under trickle irrigation and non-irrigation scenarios, replicated four times. Soils were monitored over the growing season for temperature and water content. Following harvest, potatoes were measured for total yield. Marketable yields were graded for small's 1 5/8" to 2", Canada #1 and 10+oz. Other quality indicators such as incidence of scab, hollow heart and specific gravity were also measured. Weather parameters were measured such as precipitation over the growing season. Under the drought conditions of 2001, irrigated plots at the two higher mulch rates experienced approximately 25 to 50% less water requirements during the bulking period of the production season, with no change in marketable yield. On the non-irrigated plots marketable potato yields increased by 12, 21.2 and 24.1% for mulch rates of 2.25, 4.5 and 9.0 T/ha respectively. However only the highest mulch rate treatment under non-irrigated was statistically significant (P = 0.05). Tuber quality in terms of hollow heart and specific gravity was unaffected by mulch treatments. In terms of potato grade, 10 oz showed an increase with increased mulch rates under the non-irrigated scenario. Again only the highest mulch rate was statistically significant.