'Corona crisis holds up a mirror to the sector'

Nedato is active in both the table and chip potato sector. How has the corona crisis affected these branches?
"Nedato has 4 major sales channels: freshly packaged potatoes for retail, grill potatoes for restaurants, the export of fresh potatoes and the sale of chips potatoes to the potato processing industry. Sales to the supermarkets and export destinations rose immediately, but the sales of chips - and grill potatoes, on the other hand, fell sharply."

How did you deal with this sudden change?
"Immediately after the first Dutch infection (on February 27) we noticed that everything changed. In addition to business operations, we started to focus on 2 things: ensuring that the company is not endangered and responding as quickly as possible to the collapsing market. This had a very big impact on all employees and of course also on the growers. Our main responsibility is to limit the consequences for affiliated growers as much as possible. This means that potatoes have been sold where possible. Export opportunities have been used and we have negotiated a lot with customers about the finalization of the business. We have continuously kept growers informed, because we want to be transparent as a cooperative. For example, between March and June 10 letters were sent to explain what we were doing and why. Unfortunately, we were unable to prevent many potatoes from ending up in the feed. Product that was harvested with great difficulty in a wet autumn. The impact that this has ongrowers has is difficult to describe."

That was the settlement of the 2019 harvest. What measures has Nedato taken for the current harvest year?
"The timing of the virus couldn't have been worse. The seed potatoes were sold and delivered at the beginning of March, making adjustments impossible. Nedato has the Flex System, which allows potato growers to choose from 5 pricing systems: fixed price contract, 2 pools, the click contract and the daily price. A choice must be made before April 1. This process was still in full swing at the beginning of March. This could have led to 'late decision-makers' selling more volume via a fixed price contract."

"In order to guarantee equality between growers, 2 rules have been established to complete the selection process: contracting more at a fixed price than the usual volume was not possible and it was agreed that a collective discount would follow in a situation where Nedato did not We were able to cover all fixed prices with sales. As early as March, we were able to estimate that the processing industry was going to change course for the 2020/2021 season. We therefore immediately communicated a possible volume discount of 50%. The alternative was to stop contracting, which means a large number of permanent growers were deprived of the option to opt for fixed price contracts."

It now appears that such a discount should indeed be implemented. How do the growers react?
"The reactions of the growers are diverse and depend on whether you are a Nedato grower or not. The members were aware of the decision-making process, although the disappointment remains great. For non-members and other outsiders it was the reason for critical This is understandable if you do not know the background. The growers with fixed price contracts are ultimately reduced by 40% on the volume they have committed. These potatoes are divided (proportionally) between a pool without pre-sale and/or deliver at the daily price This depends on the preference of the grower and the choices made earlier in the Flex System. Nothing will change in the agreements with table potato growers. The exact financial consequences of the measure cannot yet be estimated. The difference between the contract price and the daily price is huge now. There is a chance that this will get smaller, but it has yet to happen."

What do you expect from the new sales season. Have you noticed an increase in French fries sales?
"At the moment there are more questions than answers: about the virus, the economy and consumer behaviour. The sale of table potatoes is still a plus, but it is more difficult for French fries. Several scenarios can be envisaged, but we can cannot predict which it will be. A positive scenario is the scenario with more sales in alternative channels, a below-average harvest in Northwest Europe and an increasing French fries consumption in Europe and beyond. With full capacity utilization at processors, price formation can pick up after Christmas, but then must be all right."

In view of this scenario, will growers not be diving massively on table potatoes next season?
"In this market segment, we saw a contraction of 5% to 6% for a number of years. There is stability now, but the future is uncertain. The consumer has rediscovered table potatoes, but will it remain so? Retail will continue to focus on potatoes in the coming year "Also with new concepts. Approximately 20% of the Dutch consumption area consists of table potatoes (15.000 hectares), destined for domestic consumption and export. Eastern Europe was well on the market last season. Poland in particular seems well supplied this year."

"If opportunities arise, they will be after January. We see steady growth in the Middle East and Africa. Also for bagged chips potatoes. We have changed a pool for that into the French fries export pool, with dual-purpose varieties such as Lady Anna, Victoria and Melody. If the grower chooses this segment, we believe that this should always be done with good agreements about sales. Growing on the spec is very risky. Nedato will not change the table potato area next season."

The impact extends beyond 2021. How do you see this future for you and what consequences does this have for agreements with growers?
"As said before, we cannot predict the coming months, let alone look a year ahead. It is a moment to take a critical look at the French fries sector. This was already a sick sector before the corona. An increase in scale among growers should have led to synergy benefits "The advantage eventually disappeared completely in the chain and didn't stay with growers, while the sector has been thriving and growing steadily for 20 years. I don't think that's healthy. In such a chain every player should get a fair reward for the value he This is not possible with the current system. The coronavirus causes lasting changes. The shock effect can ultimately have a positive effect on making the sector look in the mirror. A better future will emerge from the crisis in which the sector will hopefully deal with risks more consciously, better makes agreements and the rewards are better distributed."

"As a solid and experienced service provider, we believe that we can continue to play a role in this with Nedato, thanks to its financially strong position. The future remains for good quality potatoes, which are grown around the factories all year round. We do believe that the acreage in Northwest -Europe is decreasing and the share of fixed price contracts is not increasing. A 5% acreage decrease is required to equalize this year's increase. A 10% reduction may be required to make the market healthy. The share of free potatoes is growing, but this needs to be done chain agreements are made."