Potato processor Farm Frites will go out on the farm for the 2021-2022 season with fixed price contracts that are based on a 3 or 2-year agreement. This will support a large drop in the contract price and should provide growers with stability. In addition, other contract forms are offered. Growers can fix a smaller volume at a fixed price.
Farm Frites brings stability to its contract prices for the next 3 harvest years. A multi-year contract is not new at the processor from Oudenhoorn, but the strategy is changing. The multi-year agreements were made last year substitute by a 'rolling contract'. The 2 or 3 year fixed appointment is now back. The 3-year rolling contract will continue to exist. Growers will be paid a plus of €0,25 per 100 kilos on top of the 1-year price if they choose this.
Price for 3 years
A fixed price agreement for 3 harvest years (2021, 2022, 2023) serves as the basis this year. Anyone who fixes the price for 2 years will receive a discount of €0,50 per 100 kilos. For a 1-year contract, the discount is €0,75 per 100 kilos. According to the processor, interest in 1-year contracts is decreasing and growers are mainly interested in other (customized) solutions that suit their business operations.
For the Fontane variety, Farm Frites pays the basic price of €35 per 44 kilos between weeks 9,50 and 100. Challenger and Ramos, among others, also have this award. Marquis is €0,50 higher. For the 1-year contract, the basic price is €9,50 - €0,75 = €8,75 per 100 kilos. That was €0,75 more last year (€9,50). The 1-year basic price of Innovator in this delivery period is €10,75 and that of Agria is €10,50. For a 3-year contract this means €11,50 and €11,25. These are the prices that the company sells to the farmer and also the prices that were charged last year.
Reimbursement for mechanical cooling
In week 17, the 1-year contract price of Fontane will be €14,25 and that of Innovator will be €16,25 (3-year: €15,00 and €17,00). Compared to last year, the Fontane price is €0,70 lower. Innovator's goes up 3 cents. At the end of June (week 2022 in 26), the price level is €16,45 for Fontane and €18,45 at Innovator. This means a reduction of 2 and 30 cents for the 1-year contracts.
The Innovator storage scale has improved by €0,75 compared to 2020. From week 10, Farm Frites will pay compensation for the Innovator variety for storage in mechanical cooling. From week 20 it will also be available for other breeds. At week 26, €1 per 100 kilos will be added.
Harvest 2021 starts in week 27 with Première and Sinora, with a price of €16,75 that decreases to €8,25 in week 39 for 1-year contracts. The 3-year price level is €17,50 to €9,00. The difference with 2020 is €1,75 and €1,25. From week 30, Felsina, Zorba and Lady Bianca will be purchased with a price starting at €14,25 for 1-year contracts, and €15,00 for 3-year contracts. The ex-land contracts and those of Agria are paid at 40 millimeters. That of the main crop varieties is 35 millimeters. A maximum of 40 tons per hectare can be recorded. Anyone who commits more is seen as a trader and is therefore always obliged to supply the volume.
Less on fixed price
Farm Frites aims to conclude fewer fixed-price contracts next season. The remaining tonnes can be secured via one of the other contract forms, such as the 4F contract or futures market contract. The first one in particular was chosen a lot. This is based on 50% of the contract price and 50% on the average closing prices of the potato futures market.
This year, growers can opt to take an option on the contract price for their free potatoes. The processor then has until July 1 for the early potatoes to record this volume at the contract price. For the main harvest this is until August 1. If this does not happen, or the grower rejects it, the company will pay a floor price of 70% of the contract price for the relevant delivery week.