Emsland Group is sending out a strong signal by paying out a 'Rohstoffsicherungsprogramm' for starch and flake potatoes. The support to growers consists of several components. These ensure that the prices for existing contracts with the affiliated growers are clearly increased.
The company is also shortening payment terms for potatoes. Emsland Group announced at the end of August that it would become their member growers meets for the disastrously low harvest of 2018. The company from Emlichheim, Germany, pays a minimum payment of €25 per tonne of starch and flake potatoes via a 'Rohstoffsicherungsprogramm' (raw material insurance programme) on all tonnes delivered in the 2018/2019 campaign.
Advance payment 2019
Of this €25 per tonne, €15 per tonne will be paid as an advance for concluding a contract for 2019. This will also be settled with the potato deliveries of 2019. The contracts for 2019 will be increased in price by the relevant amount, so that a commitment is made above and beyond the regular contract conditions.
In a second program, growers are rewarded extra for all the tons they deliver above the factory average. These potatoes are subject to a graduated scale in 3 steps of €25 per tonne, €30 per tonne and €35 per tonne. This applies to potatoes delivered between the factory average and 100% of the contract volume.
No role model
Emsland Group does not intend to show other processors how to do it. The measures have been taken to offer growers a perspective for the future in the extremely dry year and to guarantee the long-term supply of raw materials. Furthermore, the intention is to make it uninteresting for third parties to try to purchase raw materials contractually bound to Emsland.
The growers' association, the Erzeugergemeinschaft für Industriekartoffeln im Emsland und der Grafschaft Bentheim rV (EZG), initiated the premiums. Several constructive discussions have taken place between factory and grower. Emsland is convinced that it is necessary to take these steps in order to be able to provide customers with continuous supply in the future.
Strict supervision
Unlike previous ones reporting Emsland does indeed strictly monitor that the contract potatoes are delivered. Many plots are examined in the field, so Emsland knows the situation per region. If the processor suspects that a grower is selling potatoes freely, the Rohstoffsicherungsprogramm is immediately canceled. It is then up to the grower to prove the opposite. This has been clearly communicated and approved by the EZG growers' association.
Although some significant rain has fallen, the processor is not counting on significant improvements in yields. Most of the damage was done before the rain, and many crops died prematurely. At this time the rain can also cause disadvantages. Washing occurs in both flake and starch potatoes. This reduces the underwater weight, which is undesirable. Perhaps the very late plots can still benefit.
About Emsland Group
The German Emsland Group consists of several subsidiaries, of which starch producer Emsland Stärke GmbH is the largest. The company also has 3 flakes and 1 granulate factory. The ambition is to increase the flake capacity. According to planning, 1 new factory will be operational for the 2019 harvest. In the 2016/2017 season, Emsland Group had an estimated turnover of €600 million. The starch campaign for the 2018 harvest started on September 3. The flake factories have been running since the end of July and the beginning of August.
Boerenbusiness organizes a seminar on Friday 14 September at the AgroTechniek Holland, as the conclusion of the Crop Tour. In the seminar an analysis is given of the growing season, the price development and a forecast of the yield is presented. Sign up here for this free seminar and receive your admission ticket.