Does expensive wheat lead to fewer potatoes?

During the low point of the potato market, interest groups in Europe categorically called for the potato area in the EU-5 to be reduced by 15% for a profitable market. Since then, the market has recovered from a deep trough. The sector is looking at a brighter outlook than at the end of last year. Processing and exports continue - despite a lockdown situation throughout Europe - and prices are rebounding. Still no fat, but the worst pain has passed.

Clouded image
At the same time, the price of a ton of wheat in Europe has been rising since the last harvest. This increase came at a time when arable farmers were on the seesaw. Will it be wheat or will it be potatoes? At the time, seed suppliers couldn't quite get it over with agree. For example, more seed was used due to the wet autumn, which clouded the picture.

Arable farmers can fall back on spring wheat or barley, but the chance of this happening en masse is minimal. On clay, these crops are actually only seen as a closing item, because winter wheat simply yields more. In a financial and absolute sense. Anyone who wants to extensify their crop plan may choose to experiment with protein crops. There is demand for this, but here too the balances are meager. After all, they are based on wheat prices and require more risk. In addition, you can spread nice slurry in wheat, sell the straw and have enough time to grow a nice green manure.

Sowing conditions
Last year, the Dutch area of ​​consumption potatoes amounted to 76.730 hectares. A slight decrease compared to the previous year of 2,7%. At the same time, the area of ​​wheat also decreased by 9,4% to 109.600 hectares. This is partly due to a wet autumn. In 2018, the area of ​​winter wheat in particular peaked, precisely due to ideal sowing conditions in a dry autumn.

The 2017 harvest year was characterized by low potato prices. Did this help cause more wheat to be sown? If we look at the consumption potato area, we see that it behaved stable in 2018 and hardly changed. In practice, arable farmers tend to choose to grow more of other crops. Especially onions, in areas where irrigation is possible. If extensification is chosen, sugar beets are sometimes removed from the crop plan sooner. The burden when harvesting under wet conditions, the low payment price and difficult growing conditions ensure this.

Rising rather than falling
A year earlier, in 2016, the potato price was high. If we look at what the area did in the spring of 2017, we see a growth of 4%. The area also increased by 2012% from 2013 to 6. It therefore appears that the potato area adjusts (increases) faster in a year with high prices than it corrects (decreases) in a year with low prices.

Within the EU-4 + the United Kingdom, the Netherlands is by far the smallest consumer potato producer. A change in the area must come from Germany or France, as major shareholders. Of the total in 2020, these two countries have 2% and 31,5% within their national borders. These are both countries where wheat dominates arable farming, but in certain parts this has changed. Northern France, Northwest and Southwest Germany have clearly focused on potato cultivation. Companies have adjusted their strategy and invested in mechanization and storage. There is little chance that these arable farmers will put their material aside and opt for grain. In the long term, potato cultivation provides a higher return than grain.

Choose or grow differently
There is one caveat to this. For example, irrigation – where possible – has resulted in significant costs in recent years. The new sprout inhibitors, with which there is almost no experience, also cause significantly higher storage costs. The contract prices in France are at a slightly higher level than in the Netherlands, but the question is whether this is enough for the growers. Especially in Germany, arable farmers are increasingly choosing to grow onions. A choice that has paid off for her in recent years. German and French arable farmers have the advantage of scale and lower land prices compared to their Dutch colleagues. Even if more wheat has been sown, the area remains significant.

A large decline – as previously hinted at – is not a reality. Potato growers elsewhere in Europe are also being strengthened by rising prices, better prospects and the demand from processors not to grow less. If they do reduce, this will mainly be in the share of free potatoes. As much risk as possible is covered through contracts, should the coronavirus continue to slow down chip sales in the second half of 2021. We will know on June 1.