Market agency DCA does not expect major changes in the construction plans of most arable farms for this year. There are encouraging signs on the market for French fries potatoes.
French fries potato cultivation will most likely be loss-making this year as well. Although DCA director Kees Maas does not rule out that a rabbit will be pulled out of the hat during the season. On Thursday afternoon, March 11, he outlined the developments in the most important arable farming markets, during a webinar of the digital ATH agricultural fair.
Market bottom and chip war
There are encouraging signs in the French fries sector. The corona crisis has shown that there is always a bottom in the market thanks to the feed market, where more than a million tons of chips potatoes have found their destination. The potato starch industry has also flourished in recent years, after the area of factory potatoes had shrunk considerably for a number of years due to the phasing out of EU subsidies. This development also creates a bottom in the market. And more chips will be processed in 2020 than initially expected.
At the same time, costs have increased rapidly in recent years, because irrigation had to be practically standard and because less and less crop protection agents and preservatives are available. Moreover, there is a threat of a war of chips, because processors have invested in capacity and may be tempted to compete with each other on price. As a result, the consumer price of French fries could fall for the first time in years.
Onion market strongly dependent on exports
Onion cultivation has been attractive in recent years. It is therefore generally assumed that the acreage will expand somewhat in the coming year, especially outside the traditional Dutch cultivation areas and in Belgium. In the southwest of the Netherlands, the acreage is under pressure because of the salinization problem that was exacerbated by the drought last year.
Moreover, the pricing of onions is not as dependent on an above-average or below-average yield as other arable crops. Because the onion is not a stomach filler but a seasoning. On the other hand, the dependence on exports is very great. This has yielded good returns in recent years, but pricing is vulnerable to geopolitics.
Grain price versus sugar price
This certainly also applies to the grain price. Partly because Russia has imposed an export tax of 25 percent, the grain price has risen so sharply. DCA director Kees Maas compares it to the Arab Spring in 2010, when the grain price was last at a comparable level.
If the sugar price in the coming year does not continue the upward trend of the past six months and the very high grain price level turns out to be structural, arable farmers will make different choices. Certainly if the consequences of the corona crisis on the potato market have also become clearer next year. Because although the decrease in acreage this year is probably smaller than expected, it will take a few years before the losses are eliminated, says Maas.
