Just like in 2018, potato processor Farm Frites is the first Dutch factory to issue its contract prices for the 2019/2020 season. Prices are being increased sharply across the board, which should compensate for the price increase for the seed potatoes. The price of this will go back to the 2017 level.
In all periods Farm Frites increases its contact prices by €1,50 per 100 kilos. Last year there was a difference made between the ex-land period and delivery dry from the shed. The processor from Oudenhoorn assumes that most old potatoes are processed in June. From the end of June or the beginning of July, it is trying to start the supply with potatoes from Bordeaux. It will be an exciting period, the processor himself admits.
Off country period
The off-land season starts at the beginning of July with the Premieres. At the end of week 26, Farm Frites pays €21 per 100 kilos, which decreases to €10 per 100 kilos in week 35. Purchasing manager Walter van Stee does make one comment: "Like many factories, we have less Premiere seed potatoes than desired. it is therefore important that this goes to growers who can deliver really early."
main crop
From week 30, the factory also processes Felsina and Zorba. Land delivery of the main harvest starts in week 35, where up to and including week 42 a price increase of €1,50 per 100 kilos applies. Fontane is in week 35 at €9,75 and Innovator at €11,25. In week 17 (end of April) that is €14,30 for Fontane and €15,10 for Innovator. At the end of June, the price is €16,30 and €17,05 per 100 kilos respectively. The storage table remains the same as last year. The prices mentioned are for the size grading 35 millimeters upwards.
Seed potato costs
The seed potato price brings Farm Frites to the level of 2017, after a price reduction last year. For Fontane class A 35/50 millimeters, €49,50 per 100 kilos has to be paid. Innovator comes in at €47,50 per 100 kilos. That is even €2 below the level of 2017. According to Van Stee, the availability is sufficient. "We have the amount of seed that is required for our acreage. The seed is finer on average, so you need fewer kilos per hectare."
For the 2018 harvest, Farm Frites offered a multi-year contract with a duration of 2 or 3 years. For 2019, no multi-year contract with surcharge will be used, but a rolling contract. "The growers ask for stability in their sales price and income. A multi-year rolling contract offers this. As a factory we want to make multi-year agreements about the sale of chips. This requires a similar strategy on the purchasing side."
Rolling contract
The rolling contract offers (on top of the 2019 contract price) a plus of €0,25 per 100 kilos, bringing the result to €10 per 100 kilos. In 2020, 50% of the contract price of 2019 and 2020 will be taken and 1 year later this is spread evenly over 3 years. In all cases, the price is €10.
A maximum of 40 tons per hectare can be contracted on the fixed price contract. The remainder will be settled on the daily rate. In addition to the rolling contract system, Farm Frites maintains the futures market contract and their own '4F system'. The latter offers a pricing system with 50% of the contract price and 50% of the average closing price of the futures market.
The floor price for Fontane will then be €9,75 per 100 kilos (week 17). That of the Innovator variety is €10,75 per 100 kilos. In a year with lower prices, this gives a guarantee. In more expensive years you benefit from the high price on the futures market.
Dual suppliers
The growers of the same variety who supply to several factories, or who want to grow part of the hectares freely, will have to deal with a change. These dual suppliers can only conclude a tonne contract with Farm Frites and not a hectare contract. Van Stee explains this choice: "There is a need to cover more product at a fixed price. You can achieve this by contracting more kilos per hectare, but in a year like 2018 it appears that there is no certainty."
"Contracting more hectares entails the risk that (with a high yield) the extra yield per hectare is almost impossible to place. In this way, both parties do not have the right or obligation to offer or to take," said Van Stee.
"I'm not afraid of shortages, but of the surplus when we increase the hectare coverage," explains Van Stee. "After the 2017 harvest, we were faced with huge volumes (on top of the fixed-price kilos) and we couldn't place them."