The contract prices of the potato processing industry have become known in recent weeks. Prices for land delivery and for delivery relatively early in the season are 5% to 10% lower than last season, NEPG reports. For long-term storage, the decline is less or the price is slightly higher. Several processors are opting to contract fewer potatoes per hectare this season. The industry also seems to want to tempt growers to sign multi-year contracts.
Some growers hesitate to enter into new contracts. According to NEPG, too little account is taken of the increased production costs. The higher cultivation costs are partly due to the elimination of IPC chlorine, extra irrigation and more expensive products for killing foliage. The costs of machines also continue to rise and several growers have had to clean and adapt their potato storage to make it suitable for the new sprout inhibitors.
Financial concerns
According to the NEPG, the low potato prices and high costs in the recent period have led to (critical) financial problems for some growers. The organization says it has heard rumors about postponement of payment of land rent and seed potatoes. Banks and suppliers are said to have been contacted for extra credit.
NEPG therefore urges its members to take a critical look at the cost price before signing a contract. Waiting before entering into a contract can strengthen the negotiating position of growers. Various processors have invested in new or existing production lines. The industry has thus increased production capacity and therefore needs more potatoes. This is also evident from the mood on the physical market. Prices have tripled since Christmas. There is currently more demand for potatoes than there is supply.