The first contours for the 2021 potato season are beginning to emerge. The table potato market is still looking good, at least in terms of volume. The market for chips potatoes looks a lot less hopeful. Can you still do something about that?
When the coronavirus hit worldwide in late February or early March, lockdown measures were also imposed worldwide to slow down the further spread of the virus. This led to a huge run on table potatoes and the market for French fries potatoes collapsed. And now, three quarters of a year later, the situation is still the same. As a result, there is little or no interest from the industry in free potatoes and the price has been at the level of 3 cents / kg since March. Although the table market is going well, prices here have also decreased a bit due to the low price level of French fries potatoes.
What can be done about this? The answer is simple: if you feel that the potato basis for the contract price of your product in the market is too low, then there is too much of your product in the market. For the 2020 season, the picture of the consequences of the pandemic came too late for most growers to be able to switch and limit their acreage. That is why we are still dealing with an oversupply, with the known consequences. As growers, we can still switch for the 2021 season.
The Producers Organization for Consumption Potatoes (POC) has shown with calculations that an area shrinkage of 15% is required in the EU-5 to bring the market back into balance. NAV, VTA and the NEPG have fortunately supported this call. The final harvest in 2021 will of course depend strongly on the weather conditions during the growing season and the final yield per ha. As growers, we cannot control these weather conditions. The acreage is, that is the most important switching option. As a result of this sharp contraction, the market can suddenly be in equilibrium again and the price on the free market can reach an acceptable level.
And the industry will of course also switch. The first signs are that both the contract volume will shrink and the contract price will fall. No one could have foreseen this pandemic and its consequences. The POC is of the opinion that the risks are now very strongly placed with the grower. The contract volume is of course not very convenient for growers in the current situation, but it is still understandable. The POC cannot understand the fall in contract prices.
Due to the loss of a number of chemical agents, the costs for the grower continue to rise. For the growers who have already shared in the malaise before the 2019 harvest and are fully participating in it again before the 2020 harvest, there cannot be a third loss-making year behind it.
If the industry wants a shift in the ratio between early potatoes and long storage, then a simple price cut is the wrong signal. The POC thinks that with a good conversation we will get further than smoking each other out!
To be able to guarantee a healthy and future-proof sector, both cultivation and processing must pay off. Then the cost price of the grower must be the starting point for contracts. This has always been the case, of course, but the current situation makes it all the more necessary.