Potato contract 2021 is becoming increasingly clear

Several potato processors have now organized digital grower meetings, or their field employees are visiting companies individually. Prices for the 2021 harvest year have not yet been issued, except for some ex-field contracts. This is also still a hot topic, especially among Dutch factories. There are more differences between the Netherlands and Belgium. Especially because hectare contracts are used in our country and tonnage contracts are often used in Belgium. That requires a different approach.

Fixed volume down
At Dutch factories it is clear that the volume that growers can contract at a fixed price is no longer 40 or 45 tons per hectare. Depending on the customer, volumes are said to range from 25 to 35 tons. Not every processor makes statements about this and they all keep their fingers crossed. They do want the potatoes and it is emphasized that the acreage for 2021 must be maintained for the main harvest. Over there wrote we talked about before.

This is different for ex-land contracts. Customers are not clear about this. There are a number of processors in the Netherlands who have designed their multi-year strategy for long-term storage. The off-shore contracts are being further reduced there. There are also other sounds. The reality is that storing potatoes for a long time – with products such as 1,4Sight, Argos and Biox-M – is very expensive. The cost price increase is evident. This has been taken into account in the current contracts. However, the additional cost is not enough for good. There is therefore a chance that there will be (much) more interest in growing and delivering early, which could make early processing and long-term storage in the freezer more interesting for processors.

The pricing of the contracts is adjusted to this movement. In concrete terms, this means a split of the situation before January 1, 2022 and after. For long(er) custodians, the price reduction is less than for those who deliver early or from land. This results in ex-country price levels around €9 per 100 kilos for Fontane. In week 17 there is talk of levels around €14. For Innovator this price is €1 higher. In June the price is closer to the current season, at around €18.

Fewer contracts in Belgium?
Belgian potato processors are in a slightly different position. A lower price level is also mentioned there, although the reduction may be smaller than in the Netherlands. Instead, our southern neighbors choose to issue fewer tonnage contracts, which means that growers will reduce their acreage. Anyone who wants to grow must do so without a regular customer.

We can conclude that the chip manufacturers are looking into their crystal ball as best they can. Looking at the current sales figures - during the second wave - we see that sales of end products are declining less than was visible this spring. This gives factories confidence that recovery can take place quickly. Fast food chains are doing better, home delivery has become immensely popular and the holidays cause a consumption peak. It is impossible to say how much impact a third wave will have. Looking at Asia, there are no signs of this at the moment and large-scale vaccination can help turn the tide.

Consequences for the grower
What does this mean for the grower? The fact is that the risk of potato sales lies more with the arable farmer. Processors do not say no to potatoes, but do not want to commit to a price now. The availability of land and seed potatoes is not an obstacle. With the previous two facts in mind, growers are also not inclined to cut back quickly. But little future potato land has been sown with wheat this autumn, according to current estimates. With more risk in pricing, it is important to manage price risks well, just as factories are now trying to do.