Will free potatoes still be available?

De drought has established itself in some of the important potato areas (such as Scandinavia, Germany, Poland, the United Kingdom, the north of France and the Benelux). There is no rain yet for the next 10 days; a heat wave is even predicted, with temperatures of 30 to 35 degrees Celsius. This can be quite a blow for plots that cannot be irrigated. 

Watering more difficult
It is difficult to estimate how extensive the damage will actually be. However, it is certain that there will be a loss of yield. Also because it is becoming increasingly difficult to irrigate. In plots that have been irrigated 4 to 5 times, it is difficult to maintain growth; wear and tear therefore plays an enormous role. 

With this dry weather, the scenarios for the 1976, 2003 and 2006 harvest years can also be used again. All 3 seasons stand alone, but the drought factor can be compared well. If rain comes, as was the case in 2006 (in August), this will have consequences for cultivation and quality. This means that a restart of leaf formation and growth is lurking.

Market situation is changing
Create a important difference with the above years is the structure in the market. Never before had such a large potato area been planted and contracted. The change in the variety package also plays an important role. It is known that varieties such as Fontane are better suited to drought and heat than Bintje (but that variety uses less than 20% of the total area in Belgium). 

(Text continues below the chart)The potato futures market is rising above 2003 levels and approaching 2006.

The explosive growth of processing has also changed the playing field. In addition to the large processing requirement, the number of fixed-price contracts has never been so large in the history of potato cultivation in Northwestern Europe. Estimates from the sector show that the coverage ratio of the processors is around 80%. This would mean that more than 11 million tons of potatoes are tied up in the Netherlands, Belgium, France and Germany with a fixed-price contract.

Few free potatoes
The remainders are filled in with the excess tons, also called co-delivery kilos (pool and residual potatoes from the free potato trade). If the coverage per hectare is too large, it becomes tense to be able to meet all obligations. The excess tons usually supplied will certainly be limited.

As a result, the proportion of free potatoes is not or hardly growing at the moment. The big question is therefore whether the share of free potatoes is still available in the event of a yield loss (due to persistent drought) of more than 25%. It will be quite a challenge to put a price on this. Will it be €25 per 100 kilos, will it be €30, or will the price even exceed that as in the 2006/2007 season? Time will tell. In that sense the book becomes 'potato market' rewritten.