The lack of the sprout inhibitor chlorpropham and the foliage killer diquat are the hot topics in the conclusion of the potato contract for 2020-2021. Aviko Potato is introducing several price-supporting measures to combat this cost price increase.
Also last year anticipated Aviko Potato on current affairs. Then the index contract was introduced to compensate for the higher cultivation costs due to frequent irrigation. This year the impact - due to the disappearance of chlorpropham and diquat - is possibly even greater. According to the company, the pricing is therefore adjusted where necessary. Moreover, according to Aviko, additional compensation measures have been taken to support the grower.
Variety package the same
The potato processor already has a wide variety of contract types. In addition to the fixed price contract, there is the click contract, chip futures contract and, since last year, the index contract. There is also the famous potato pool. We work with 3 breed groups: A (Fontane, Challenger, Bintje), AA (Victoria, Miranda) and AAA (Innovator, Agria, Marquis, Lady Anna, Zorba).
Due to the challenges mentioned earlier, the variety package has not yet been tinkered with for this season. The seed potato prices often remain the same. All prices mentioned are per 100 kilos. Aviko uses a size grading from 40 millimeters upwards.
Increase in AAA segment
The field season starts in week 30. The processor's strategy is to continue using the old harvest for a long time. Field delivery of the main harvest will start in week 33. Prices remain unchanged compared to last season. An early harvesting premium is given in weeks 33, 34 and 35, decreasing from €1,50 to €0,50 per 100 kg. Group A amounts to €36 in week 10,50. For AA it is €11,25 and AAA is €12,00.
Surcharge on storage
The triple-A group will receive an additional €0,25 across the board. From week 9, Aviko will pay an extra compensation to compensate for the higher costs for sprout inhibitors. The maximum premium – at the end of the season – is €1 per 100 kilos.
In week 17 (end of April), group A comes to €14,91 and group AAA to €16,67. This includes a custody premium. On top of that, the existing bonus system will be paid out. At the end of June (week 26), the first group is paid €17,43 and the third group €19,18.
This is not the only price increase that Aviko is implementing. The loss of CIPC (chlorpropham) creates the risk that batches are kept (too) cold due to dormancy. This is at the expense of baking quality. Anyone who supplies the same baking color as before will receive a premium of €0,50 per 100 kilos. This bonus serves as an incentive for the grower and his storage skills.
Reimbursement for mechanical cooling
Growers who have invested in mechanical cooling will be rewarded for this from next season. From week 17, the processor will pay out a bonus of €0,40, with an increasing scale of €0,05 per week without a maximum.
In concrete terms, it comes down to this: anyone who supplies a triple-A variety (Innovator or Agria) according to the standard until the end of June can count on a basic price of €18,26 per 100 kilos. In addition, there is an additional storage fee, the baking color premium and the surcharge for mechanical cooling. This brings the basic final price to €20,03 per 100 kilos. This price does not include the existing bonus system with points based on underwater weight, size and body color. Anyone who supplies 40 tons or more per hectare at a fixed price will receive an extra €0,50.
Long-term care collective
The 2020-21 storage season will be exciting for both growers and buyers. How do parties maintain storage, what residues is the buyer confronted with and what is the effect of alternative sprout inhibitors? The long-term preservation collective was founded at the insistence of the Potato Growers Committee (ATC). “The exact cost increase remains unknown. We do know that the risks increase significantly with long-term storage,” says ATC chairman André Broeze.
Growers who supply potatoes between week 21 and week 30 can register for the collective. Broeze: “It is not a separate pool and is not billed or published as such.” From weeks 10 to 13, Aviko will intensively sample and monitor the batches. If a batch unexpectedly deteriorates, it will be processed earlier. If a previously registered party performs well, it may be pushed back to continue product availability. An independent third party will take over the monitoring and assessment process.”
“If a batch is delivered early, the grower will receive the storage fee for that week,” he continues. “The alternative is for the grower to take on the entire risk. With earlier delivery, the proceeds are assured. If storage is carried out for longer than intended, the higher storage fee for the grower applies.” If a party is transferred at Aviko's request, they also take over the risk at that time.”
Cost price in limbo
The ATC has also discussed the lack of diquat extensively. “This file is even more difficult,” says Broeze. “The impact varies per breed and the consequences are not yet known. This makes it difficult to sketch a future scenario. The fact is that the lack of Reglone entails higher costs. At the moment, we at ATC do not have sufficient insight into the impact on the long-term cost price. We will continue to focus on this and this will remain part of the discussion.”