The contract prices for 2020/2021 in a row

Every season has its theme. Last year it was the higher cultivation costs as a result of irrigation and the compensation for a yield decimated by drought. This year, the germ inhibitor Chlorpropham is unanimously the most important chapter.

The lack of CIPC has 2 important consequences. First of all, storage areas must be cleaned. Secondly, there is the cost increase. Alternatives are simply (significantly) more expensive. That's where a price increase comes into play. Remarkably, there is almost no mention of Diquat's disappearance. That impact is still uncertain.

Less pressure off land
Last fall, chip manufacturers started to worry about available supplies and wondered how the lines could continue to run. Prices for field potatoes increased by €1,70 to €1,80 per 100 kilos. This year, availability is less of an issue.

One processor lowers the price slightly. The rest is unchanged. Despite a wet harvesting season, the factories are positive about the quality in the shed. Most of them like to continue growing on the old harvest for a long time (up to and including week 30). You know the quality and you know the tons, that's the idea. This remains uncertain for early potatoes.

For price increases we have to go to the retention period. The timing at which processors increase their prices varies. One starts in January 2021, while the other has to wait until April. It is clear that Innovator is better appreciated. Some processors place extra emphasis on this variety and encourage this with the price. What also plays a role is that Fontane has performed relatively well over the past 2 (challenging) years.

*This table is intended as an overview and NOT as a comparison between processors. The table shows the basic price without premiums and surcharges. Agristo and Farm Frites work with the sorting 35 millimeters upwards. Aviko, McCain and Lamb Weston/Meijer with 40 millimeters upwards. See below for further explanation.

Average price increase
Boerenbusiness takes week 17 (end of April) as the benchmark for all articles. The price increase for Fontane this week amounts to an average of €0,62 per 100 kilos, compared to €1,89 last year. At Innovator the average increase is €1 compared to €1,97 last season. In June the increase at Fontane is €0,89 on average and for Innovator it is €1,48 on average. We do not include McCain's Fontane awards. This processor communicated to Boerenbusiness in the past the price for 50 millimeters upwards at Fontane. This year a price was given for 40 millimeters, which makes it look in the table as if McCain has lowered it. This is not the case: Fontane gets €0,20 to €0,85 and Innovator €0,45 to €1,40.

For the first time, we see a price of €20 per 100 kilos appearing in fixed price contracts. You will have to collect additional premiums for this. If you supply Innovator from mechanical cooling, Lamb Weston/Meijer and Aviko Potato will both pay this amount. This amounts to €20,38 at LWM and €20,03 at Aviko.

Innovator scores better
If we look at the average contract price, it is slightly lower from Fontane (week 36) compared to last season. Almost Innovator has an increase of €0,10 because LWM and Farm Frites are implementing increases. Increases are noticeable in the other periods. Fontane gained €17 in week 0,39 compared to last year and €0,65 at the end of June. At Innovator this is €1,01 and €0,98. The price difference at Innovator from LWM is because last year this premium was included. Now it is without.

The CIPC chapter is a headache for processors. Especially because so much is still unclear. To start with, setting a temporary MRL. Processors display the Vavi conditions for cleaning storage areas. How intensively this should be done is a gray area in which growers have to make their own decisions. The Vavi conditions are leading in all contracts. Customers emphasize that the sector must make a joint effort. Relaxing measures, such as being able to mix batches, can help processors enormously. The question is whether this will be approved.

Highest level ever
The average contract prices are at their highest level ever. The price that was charged 3 years ago at the end of June is now already achievable in April. In practice, there is a lot of talk about a cost price increase of €3 per 100 kilos. Mainly due to the use of more expensive sprout inhibitors, but also the lack of Diquat (Reglone) and rising labor costs. This amount will not be honored.

The cost price is different for everyone, processors indicate. Whether a fixed price contract is suitable depends on each grower. Long-term keepers, with the right instincts and a well-equipped storage facility, can benefit from the price increases. The intermediate segment in particular (January-April) has to make choices.

The chip producers are almost unanimous in their prediction that the European potato area will increase this year. Only a small amount of growth is possible in the Netherlands and the Flemish part of Belgium. There is more land available, especially in livestock farming areas. More growth is possible in Wallonia, parts of Germany (Lower Saxony) and mainly Northern France. Processing capacity has not expanded enormously over the past 12 months.

New factories are planned, but have yet to be built. Two seasons marked by drought have affected the potato supply. A favorable growing season can quickly change this. The seed potato supply is no problem. Prices usually remain stable or rise slightly.

Wildcard Poland
The United Kingdom occupies a special position. The country consumes the most fries in Europe and is therefore an important sales market. It remains to be seen to what extent Brexit will cause problems. As the only country in the EU-5, a significant area still needs to be harvested here. A country to keep an eye on is Poland, where it has been catastrophically dry for 2 years in a row.

Are growers in this country able to make new commitments? Customers are faced with major shortages. Despite winter rains, water levels have not yet been replenished sufficiently, raising fears of a third dry year in a row. This affects the 'potato flows' within Europe.