A special scenario is currently taking place in Belgium. The dissatisfaction among growers about the new potato contracts for the 2019/2020 season is increasing. The terms and conditions have reportedly been amended in favor of the manufacturer.
Where Dutch advocates choose to sit down with the potato processors, Flemish colleagues use a different method. The factories there can count on fierce criticism from the arable farming foremen. The relationship between the potato grower and the factory has cooled, to say the least, writes news site felt.be.
3 extreme years
Belgian potato growers have had 3 exceptional years. In 2016, the harvest was poor due to drought and the processors held the growers to their contract obligations at the time, meaning they had to purchase free potatoes. In some cases, the contracts were settled with the 2017 harvest. The yield of the early chip potatoes was also poor at the time, but the main harvest was extremely good. This resulted in low prices. In addition, the 2018 harvest is historically small, with the obligations being cited again.
However, a comment from Belgapom, who speaks on behalf of the member processors, now adds fuel to the fire. According to them, there are growers who do not want to deliver the contracted volume, in order to benefit from the high free market price. According to General Farmers Syndicate (ABS), this is not the case. Potato growers are saddled with empty barns, low (financial) returns and high fines. The comment is therefore not well received.
Heavy fines
According to Guy Depraetere of ABS, many potato growers are saddled with fines ranging from several thousand euros to €40.000. This is because the growers cannot meet the contract conditions. According to him, passing on the problems is a purely 'Belgian phenomenon', especially because barrel contracts are concluded there and not hectare contracts.
However, Belgapom sees this differently. According to the party, the costs are not forwarded unilaterally. "The entire chain has this year to lose past. They have to buy more expensive potatoes to meet their obligations," says secretary Romain Cools. "The high raw material price is now slowly translating into the sales price at retail level. The numbers show this.”
Stricter conditions
The extreme year of 2018 has brought changes to the contracts, but according to ABS, not to the farmer's advantage. "In the new contracts, the imbalance between the grower and the buyer has increased. The farmer bears all the risks; force majeure clauses are being closed or disappear completely and the demand for hectare contracts is not being met. The contract price has been adjusted upwards, but not higher than the level of 3 to 4 years ago," said Depraetere.
In addition, the content of the contracts cannot be properly negotiated, as the arable farmer experiences. Seed potatoes are used as a means of pressure by the industry: a grower must sign if he wants to grow potatoes.
Price and conditions
Belgapom also looks at this differently. "The contract prices in Belgium are much higher than in the Netherlands. Our northern neighbors calculate with a grading of 40 millimeters upwards, while in Belgium 35 millimeters is the standard. This also influences the price. In the vast majority of cases, the contracts for found a solution during the 2018/2019 season," says Cools.
A disappointing price and stricter conditions do not match the sound of Belgian growers. Nevertheless, potato processors note that contracting runs remarkably smoothly. ABS expects that the acreage in Belgium will decrease slightly, which has everything to do with the reduced seed potato availability. Despite the decline, there is overproduction during an average harvest, resulting in low prices.
Facts are correct
Cools' comments, on behalf of Belgapom, are indeed correct. In the contract price comparison of Boerenbusiness In many cases, the Belgian Agristo comes out on top paying off the bus. Also the price of Clarebout en RTL Fries is at a high level, compared to the Netherlands. Due to the expansion drive of some Belgian factories, more potatoes are needed. A higher price encourages expansion of the area, after which all players have to participate. The Dutch potato sector is in more stable waters.
There are noticeable differences with regard to the delivery specifications. Agristo, but also the Dutch Farm Frites, uses 35 millimeters upwards. Not surprising, since Farm Frites contracts a lot in Belgium. Aviko and Lamb Weston Meijer use 40 millimeters upwards. McCain works with separate contracts, depending on the month. The customers who Boerenbusiness spoke all indicate that their delivery conditions have not been adjusted, contrary to what ABS hears in the market.