The expectations of the potato chip area for the 2021 harvest in Northwestern Europe are flying around your head. A shrinkage of the acreage seems certain, but just as relevant is the question: what are the consequences of these figures in the longer term?
NEPG expects a contraction of 3% to 5% in Belgium, Germany, France and the Netherlands, PCA/Fiwap talks about a 10% contraction in Belgium, Destatis talks about a 1,5% contraction in Germany, VTA puts it at 5% contraction The Netherlands and so on we can go on for a while. The exact shrinkage will become clear later.
Due to the corona crisis, the potato market was and is under considerable pressure. The futures contracts for April have been settled well below cost for 2 seasons. These low prices are at the expense of the yield of potato cultivation. Both for the free portion of potatoes and for the potatoes supplied by the contract growers. It is therefore not without reason that growers ask themselves whether and how they should continue growing potatoes.
After 2 poor price years, it is logical that arable farmers are planting fewer potatoes. Although the price revival on the futures market in April for the 2022 harvest has convinced some doubting growers. The shrinkage in the area is a break from the trend of the past 5 years. The area in Northwest Europe grew by 7,7% in that period according to the NEPG figures. Processing capacity has increased even faster in the same time. Estimates vary somewhat, but 25% seems realistic.
What now?
It will be exciting to see what the market will do this season. If the mood in the potato market does not change (read: market prices lower than €15 per 100 kg), the question is what that means for the area of storage potatoes in 2022. Especially given the development of wheat prices in the past six months.
Bearing in mind the expansion of European processing capacity, especially in Belgium, there is a real concern whether there will always be sufficient potatoes available. This does not seem to be an immediate issue this new season, provided the growing season proceeds normally. This question is certainly justifiable for next season.
It still seems far away, but in six months the contract negotiations for the 2022 harvest year will start again. Contracting a larger share of the potatoes and at a higher price may be a solution to ensure sufficient supply. But the further assumption of (price) risks from growers by the processing industry has so far not fit in with the strategy of most processors.