North-western European Potato Growers (NEPG) assumes that potato growers in the EU4 countries will not be able to grow any more potatoes in the coming years.
The growers’ organization predicts that the potato market will gradually change from a demand crisis to a supply crisis. So from a shortage of demand, the situation in the market changes to a shortage of supply. Over the past two decades, the development of the European potato area has been driven by a growing demand for processed products. Next year could be a turning point, according to NEPG, if potato growers are no longer able to meet demand.
The reasons for this are the availability of sufficient suitable potato land, declining yields due to climate change and higher production costs. NEPG doubts whether potato growers are just as eager to produce potatoes in the coming years as they were five or ten years ago. This while processors invest in new production lines and thus show that the expectations on the sales side of the market are positive.
Better contract prices
NEPG questions whether the better contract prices are sufficient to meet the growing demand of the potato market. The growers’ organization points to the strong cost increase at company level. Processors have even revised their contract prices upwards in recent weeks. Most contracts are now 2.50 to 4 euros per 100 kilos higher than last year.
The amount of the contract prices for potatoes depends on the country, the buyer, the delivery period and the variety. NEPG assumes that the higher price level sometimes covers rising production costs and sometimes it does not. The organization’s advice to growers is to make a proper calculation of the cost price themselves and to assess whether a contract is interesting or not on that basis.
The potato yields in the countries that participate in the North-Western European Potato Growers (NEPG) are reasonable to good. Processors confiscate almost all potatoes. Contract prices decreased and production costs increased.
This year’s contract prices decreased by 0.50 to 2 euros per 100 kilos compared to last year. According to the NEPG, the contract prices for 2022/2023 must increase by at least 3 to 4 euros per 100 kilos to keep potato cultivation profitable. If that doesn’t work, area reduction could be the solution for better financial situations for growers.
After one of the most humid summers in recent decades, the harvesting conditions were not ideal, especially in the Netherlands, Belgium and Germany. France was the exception with an easy and quick harvest. In some regions in the NEPG zone, gross yields were quite good, but there were many crop losses in the fields due to water damage and physiological problems such as hollow hearts, split potatoes and growth cracks. Because the industry desperately needs the potatoes, it simply buys the products.
Decrease in acreage
The potato area in the NEPG decreased by 24,000 hectares to 498,000 hectares last year. That is a decrease of 4.6 percent. Production decreased in that period by 0.70 million tons to 22.7 million. This decrease, coupled with the resumption of most export flows of processed products, leads to a certain balance between current supply and demand. Despite uncertainties in the market, the NEPG expects agricultural prices to be comparable to the contracts. Higher production costs, higher grain prices and uncertainty about contract prices could affect the potato market in 2022.
