HZPC sales record with fewer kilos

Despite last season's lower crop yields, HZPC growers can still count on a higher financial yield per hectare than last year. This is mainly due to the high final payout price.

HZPC Holland bv announced on Thursday 15 June that it would set the final payment price for the Dutch seed potato pool for the 2016 harvest at 34,40 per 100 kilos. This means that the payout price is 3,8 percent higher than the forecast price of 33,15 euros that was issued in February. That was then the highest price in the past 9 years. Normally there are a few dimes difference, now that is 1,25 euros.

Large gap between forecast and final price
Director Gerard Backx explains why the gap is so large: 'When we calculated the forecast price at the end of February, you made assumptions such as the number of tonnes that will not be sold. In the end it turned out that we managed to sell more tons. More oversizes were also accepted than we had estimated beforehand. It makes a lot of difference whether or not the last few 1.000 tons are sold as seed potatoes, but the French fries industry still wanted to take the oversized industrial varieties.'

HZPC attributes the earnings to the better than expected good sales that the seed potato trading house from Joure was able to realize. These more than compensate for the lower crop yields. Weather conditions during the growing season led to 10 percent lower weight yields compared to the 2015 harvest year, which was excellent from a technical point of view. Compared to the five-year average, the average hectare yield of the 2016 harvest was more than 3 percent lower, both within pot sizes and in terms of the total yield, as calculated by HZPC.

Virtually no seed potato for consumption
However, the prices for certified seed potatoes were pushed up by the high European prices for consumption potatoes. Due to these high prices, fewer consumption potatoes were left over to fill the available acreage. The second reason for the upward price pressure is the more limited supply of seed potatoes from the 2016 harvest.

The situation resulted in HZPC selling the highest tonnage of seed potatoes from the Dutch seed potato pool ever. 'We could not have foreseen this earlier this year,' says Backx. 'Due to the scarcity of the French fries varieties, hardly any seed potatoes have gone to consumption, because these have been cut into large sizes. A little more of the export varieties went to the consumer market. Within the EU you can supply all sizes if the customer wants it, but outside the EU you can't do much with oversizes. At Spunta it is difficult to find another destination for the large sizes. Depending on whether or not batches have been treated with imazalil, these seed potatoes normally go to the consumer market, the digester or animal feed.'

Sales record
'Despite the 10 percent lower weight yield per hectare, HZPC still managed to achieve a sales record', says Lilian Escalon, HZPC's Europe director. The group realized a 9 percent higher financial yield per hectare than from the 2015 harvest. 'In addition, the quality of the seed potatoes from the 2016 harvest is remarkably better than the year before. On average, this harvest year is the best harvest year of the last decade for the HZPC grower, with the exception of the 2010 harvest.'

The 2016/2017 season can be summed up in 3 key words: the changes in Algeria, growth cracks and shortages, but HZPC says little about that. Backx: 'There have been some difficulties, but we did not immediately experience that as a major limitation. When Algeria later increased the quota again, that was nice. This is because we could do a little more, but an important part of the volume had already been delivered to other destinations because we had pre-sorted the situation well in advance.'

Impact growth cracks minor
And the growth cracks discussion has also done little, according to the company. The political discussion about expanding the standard has touched us somewhat. The adjustment has given us almost no extra potatoes for the seed potato market, which is why we, as a company, were against it. Especially mid-season. As a result, we were able to deliver an extra 1 percent. That doesn't solve the problem. The problem mainly occurred with Fontane, our varieties didn't have that many problems with growth cracks, so the standard extension didn't mean much.'

Not all-important
What did have an impact was the shortage situation, but according to Backx this was not the decisive factor either. The shortage was greatest in industrial potatoes, which are mainly planted in the Netherlands. 'That market is a quarter of the total sales. Plus, it was clear it was going to be tight. Then you immediately look at what you have available across the EU and how you can shift parties in such a way that customers across the EU are served as well as possible. Our policy this year was aimed at also selling the large sizes as seed potatoes. You don't normally do that, but this year it was a solution to this season's problem.' Like other market parties, HZPC also had a hard time supplying its customers in a short period of time, but the good planting season prevented logistical chaos.

Explanation of the pool price
The average price* across all varieties, based on autumn delivery, for the poter size of class E amounts to an amount of just under 34 euros per 100 kilos before growers' payment and excluding VAT. The growers supply classes S to A. The average price for all these classes is 34,40 euros, because relatively more potatoes are grown and delivered in the higher classes, for which higher prices are paid. In addition to the payment price, the growers receive compensation for storing and bagging the potatoes. These are not considered here.

Europe outside the Netherlands
Around this period of the year, HZPC also determines the grower prices for its growers in the other HZPC production areas within Europe. The circumstances for determining those prices differ from those in the Netherlands. However, the high European demand for seed potatoes also has a positive influence on the payment to European HZPC growers outside the Netherlands.

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.