The potato sector has emerged from its lowest point. There is demand for potatoes, which reflects the prices. The sale of table potatoes and chips can also be discussed with some positivity. Potato company Nedato is trying to prepare as best as possible for the coming season. This requires a transparent and realistic listing, says director Wim van de Ree.
Nedato decided last fall to settle all payments relating to the 2019 harvest before the money from RVO.nl had been received. How did that turn out?
"As a cooperative, we have made choices for fair treatment of all growers. RVO's chip potato scheme also played an important role. Due to good contact with RVO, the settlement of all applications has almost been completed. There has been intensive consultation with the growers about the effects and impact of the coronavirus. The consequences are not all negative, such as increased potato consumption. Moreover, it gives reason to think about a number of themes that we are currently encountering."
What kind of themes are you referring to?
"As a collecting trading party, we make a positive contribution to the market operation of potatoes. Nedato does not have co-delivery potatoes, but a mix of price formation systems. This requires trade in free potatoes in order to interpret the market and - if necessary - to get it moving. This has remained abundantly clear over the past 4 weeks. The challenge is to make the trade well recorded and transparent as a basis for realistic quotations. The 2020 chip potato harvest was initially sold at very low prices. As of September, it is therefore estimated that around 1 million tons French fries potatoes went to alternative destinations in Northwestern Europe: feed, flakes and starch. Without a price correction, this flow would undoubtedly have continued. There is now a realization that supply and demand have come closer together. The trade in free potatoes has increased since the beginning of this year. played a major role in this price increase, both through current sales and the issuing of tenders for later this season. Without free potatoes this would not have happened."
Do you think the current quotations reflect the market situation well enough?
It is desirable that the realized trade is transparently displayed, as a basis for a good quotation. The bottom of the PotatoNL quotation was disappointing at the beginning of January, and gave reason to think about the structure of the quotations. Is all trade visible? A frequently heard opinion is that the processing industry – logically – provides a lot of input, but only uses the quotation as a basis for co-delivery potatoes. If that is really the case, there is no point in just talking about that. Something has to happen. Then there is the PAT Index, which BO-Akkerbouw organizes and for which it is also ultimately responsible. It would be nice if a broader basis for price developments was created through this route. Transparency is a must, especially in the future."
Speaking of the future, how do you view the 2021-22 season?
The main harvest goes into the ground in April, with more questions than usual. As far as I am concerned, the most important thing is the recovery of chip consumption. Growers now have to prepare for this because you can only plant once for a harvest that will last until August 1. You notice a lot of doubts about the area and that is possible. We still have 2022 weeks left. In my view, the area can decrease by a maximum of 12%."
In addition to the area in the EU-4 + the UK, there is the pricing at processors. How is Nedato in the match?
"It is becoming increasingly clear that there is a need for a fair distribution of the financial risks in the chain for a robust sector. In order to have sufficient potatoes of good quality available, the grower must be rewarded for taking risks and for covering are costs. Most processors will charge less volume at fixed prices. Nedato maintains the volume at a fixed price, compared to previous years. The contract prices of a number of varieties - Innovator, Markies and Lady Anna - remain approximately the same as last year. Other varieties see a slight drop in contract prices and daily prices. The coronavirus remains an incident. On a very large scale, but it will pass. Changing policy and choice regarding price formation based on one incident is, in our opinion, not wise."
Those are the fries potatoes. How do you see the market for table and export potatoes developing?
"These markets are clearly distinctive. The requirements regarding quality and certification - especially for table potatoes - are much higher. This entails a higher price and this is also achieved. Retail sells more product, but that requires top quality. The Exports are not doing badly in terms of volume, but the price levels are considerably lower than retail-suitable potatoes. Especially growers who have consciously specialized in table potatoes in recent years are continuing the cultivation. There is some demand for expansion of the area by growers. The most important thing is to ask yourself whether you can achieve the desired quality. If that is not possible, there are fewer alternatives and you have to take that into account. Nedato will continue to maintain approximately the same area with its own growers next year."