'Fries industry can write 2020 and 2021 on the stomach'

Several countries in Europe have now declared a (partial) lockdown due to new outbreaks of the coronavirus. This means that the catering industry has had to close its doors again in the Netherlands, Belgium, Germany, France and the United Kingdom. "The Benelux is an important sales market for the French fries industry," says Romain Cools, acting CEO of Belgapom. "France even more so and the United Kingdom is in 2nd place. This will have a significant impact on the companies in our sector and their activities."

30 percent fewer orders
Cools confirms this the image that Boerenbusiness outlined earlier this week. Companies that were already hit hard during the previous lockdown are particularly hard hit. "Some factories then saw their sales drop by 40%." The new lockdowns - just like in the spring - mainly impact processing companies that have strong sales to the food service channel. “It varies from company to company,” says Cools. “But this time there are factories that are seeing a 30% drop in orders for November and December.”

With regard to sales to retail, potato processing expects little to no impact. Some companies even anticipate a small increase in sales in this segment. French fries sales to countries outside the European Union also appear stable for the time being. Cools: "Only a single company predicts a contraction of 20% here. In general, exports are continuing well. The international demand for fries, including from Asia, has increased again in the past period. Partly as a result, the processing companies were catching up. , after the decline from March to June. There were signals from most companies that we were already at 90% of last year's production level."

More takeout and delivery
According to the Belgapom leader, it is extra unfortunate that corona is once again throwing a spanner in the works. "In any case, this second wave will have a major impact on the sector. After all, two-thirds of French fries production is sold within the European Union, where the lockdown measures now have a major impact on the food service. A positive development compared to the first wave is that catering companies now stay more active. Restaurants are setting up activities more quickly. For example, there are more takeaway menus and chip shops delivered to your home."

The closure of the catering industry in many countries will probably last until Christmas or even into the new year. "Hopefully the brewery will gradually come back to life in January," says Cools. "Although people are already talking about a third wave. And even more peaks until a vaccine is available. From the potato industry, we only see our Interpom trade fair in November as the 'new spring' for our chain. This means that we can write the 2020/2021 season on our stomach."

Contracts 2021
Normally, the first contracts for the new year are published just before or during the Interpom. Now that the event is canceled this year, it remains unclear for the time being what impact the current situation will have on volumes and prices in 2021. "The general expectation is that these will decline. Most factories expect a contraction of 10% to 15%. %. Some even talk about 40% less volume than last season."

Everything depends on how the new wave affects sales, how long it will last and to what extent alternative sales markets are found for French fries potatoes. Cools is relatively positive regarding current contracts. "Most factories expect to be able to process the contracted potatoes. However, the uncertainty is in the first 6 months of 2021. Suppose the sales stagnation continues into the new year, problems will arise here and there with the processing of contracted potatoes. storage capacity in the freezers also has its limits."

Other sales barriers
The corona pandemic is not the only worrying development for potato processing, Cools emphasizes. This is also what plays in the background anti-dumping discussion, including in New Zealand, which may lead to import restrictions and give others pause. The use of 1,4Sight in storage can also reduce the risk hinder exports, as the germination inhibitor is not yet recognized in many countries. "And then we haven't even talked about the consequences of Brexit. We really live in unique times."

If the sales markets evolve as is currently the case, Belgapom does not expect any problems in the supply of factories. The fact is, however, that yields in Belgium lag behind neighboring countries. "There has been significantly less precipitation here than in France, the Netherlands and Germany," says Cools. "The problems surrounding water collection and the limited irrigation options are therefore at the top of the agenda, both for the government and in the chain."

Need supply from neighboring countries?
Currently, about 20% of the potatoes in Belgium still have to be harvested. This generally concerns heavy soils where the harvest has been stagnant for a long time due to heavy rainfall. "In a number of areas, the harvest will still be completed due to better weather conditions. But it is also expected that 5% to 10% will not be harvested. If this has an impact on the supply of factories, the potato processors, who are located in the borders, their potatoes certainly cross the border. Many of our companies spread their risk over a larger cultivation area. And if necessary, I read that Germany, the Netherlands and France can offer more than enough product on the open market."