All contract prices for 2019/2020 in a row

After last season a complete price reduction has been implemented, the processors are increasing their prices for the 2019/2020 season. In all cases these are above the 2017 level, with large increases especially noticeable at the end of the season. In individual cases, almost €4 is added. Boerenbusiness lists the contract prices of 5 Dutch processors.

* The table shows the basic price without premiums and surcharges. Agristo and Farm Frites work with the sorting 35 millimeters upwards. While at Aviko and Lamb Westom/Meijer this is 40 millimeters upwards. The price for Fontane from McCain is for 50 millimeters upwards; it charges a separate price for 40 to 50 millimeters. For Innovator there is 1 price for 40 millimeters. The price in June (Lamb Weston/Meijer) applies to delivery from mechanical cooling.

Across the board, in the 3 periods mentioned, Innovator records a higher price. The price increases here are on average €1,83, €1,97 and €2,23 for ex-land (week 34 to 36), the end of April (week 17) and the end of June (week 26). Fontane comes to €1,69, €1,89 and €2,17 on average.

Does price increase deliver more returns?
It remains to be seen whether an increase in prices will result in a higher net return for the grower. The seed potato costs are of great importance, because they ultimately determine how the presented price increases are achieved. Agristo, McCain and Lamb Weston/Meijer (LWM) say they will not or hardly change prices. Aviko increases prices by €5 per 100 kilos. At Farm Frites you have to pay €2 more for Fontane and €2 less for Innovator.

The 5 processors are careful in making statements about size grading and to what extent this compensates for the required quantity per hectare. You will have to wait and see until you have actually received the batch.

New contracts and conditions
Not all growers are in a jubilant mood. After a very erratic growing season, they had hoped for a higher price and more flexible conditions. They would have liked to see high costs for irrigation reimbursed, but it appears difficult for processors to translate this into the contract price. Aviko does things differently. They launch the Index contract, which takes the cost price into account. This also includes the price for irrigation.

Last year Aviko also did things differently. Then it started with a bonus-malus system. The malus (discount) expired after the last harvest. This decision will be finalized for next season. With other processors, the contracts and conditions remain unchanged, despite discussions with representatives. They emphasize that this is a long-term issue.

Belgium vs Netherlands
The difference between Belgian and Dutch industry is growing. Agristo is included in this overview because it has a factory in Tilburg and is increasingly active in contracting on the Dutch market. Agristo offers the highest price in almost all periods. Off country, for Fontane, McCain is at the same level. Agristo does not offer a contract price for Innovator at the end of June. During that period, LWM is at the top.

The other Belgian processors charge similar price levels, which are all above Dutch prices. They are committed to further growth of the area. The higher price should provide more motivation among growers. Boerenbusiness intends to publish a contract price comparison separately for the Belgian factories.

off country
Thanks to the large potato volume at the beginning of 2018, processors could afford to contract fewer early potatoes and delay the start of the harvest season. This will be reversed for 2019. The factories have to diligently look for new potatoes to bridge the period between the old and the new harvest. For this purpose, potatoes are mainly sourced from early growing areas in Europe.

A slight trend was noticeable last season among Dutch processors, who aimed for 2- and 3-year contracts. This is hardly the case this season. Factories do not want to look too far ahead at the current price level and offer a smaller plus, or even not at all.

Ready to see how Snowflake works?
The factories move with the market. After an 'expensive year' in 2017/2018, prices were corrected the following year, when the physical market was at a low point. This year the opposite is happening. Entrepreneurs must decide for themselves which sales strategy will yield the best results. This is a mix of the price offered, seed potato costs and the associated conditions. The price of the April contract on the potato futures market maintains itself at €16,50 just above the contract level for next season in that period. That also makes growers think.

The processors certainly do not want to contract fewer, but rather more, potatoes. If spring starts early and the growing season is moderate, shortages quickly turn into surpluses. The prices offered thus offer a safe haven. Although customers prefer permanent contracts, there are more options. In the Potato Analysis we wrote about the opportunities that click contracts offer. Ultimately, every grower must determine the right strategy for himself and his risk profile.