The potato market has recovered after a period of extremely low prices. Nevertheless, growers are murmuring left and right about the current alfand prices and the futures market quotation. The current price level is not bad, especially compared to last year, but the feeling is that there should be more in it.
The price of the April contract on the futures market continues to fluctuate around €18 per 100 kilos, the average price for French fries at PotatoNL was €14,50 on Monday and Belgapom quoted €35 for early farm potatoes in week 12. Considering the circumstances, these prices are on the meager side, according to several growers.
The starting position is optimistic
There are also signs for a higher potato price. The area in Northwestern Europe has shrunk significantly compared to last season and an average yield is expected at best. In the meantime, demand for fries on the global market is good and processors have continued to invest in additional production capacity. Compared to last year, most factories have contracted fewer hectares and especially fewer tonnes per hectare.
However, a market is created by supply and demand. Due to a large supply of cheap old potatoes and the slow progress of the current growing season, many factories have switched to the new harvest a few weeks later than originally planned. The off-farm season has been shortened and tons of crops have grown in recent weeks. This currently provides a lot of supply. This ample supply may continue at the beginning of the storage season due to quality problems.
Costs rising
In the meantime, given the current prices, several growers will wonder whether they have and continue to have sufficient confidence in potato cultivation. The average grower still has some gaps to fill from the past season. In addition, cultivation costs are increasing. Fertilizer, crop protection products and diesel, for example, have become considerably more expensive. The new potato season still sounds far away, but in a month's time the first part of the construction plan will be completed with the sowing of winter wheat.
It is often said that the potato price has little influence on the Dutch potato area. Arable farmers in extensive regions in France and Germany in particular would easily abandon potato cultivation, especially if wheat is expensive. However, it appears that in the past a low potato price did indeed influence the acreage in the Netherlands. For example, the largest area in 2019 was 78.890 hectares and the smallest area in 2012 was 67.450 hectares, a difference of 11.440 hectares.
The relationship between price and area in the next season cannot be translated one to one. After moderate years such as 2011 and 2014, a decrease in area followed. There are also exceptions. In 2017, for example, prices were under pressure due to a top harvest. The acreage increased the following year. Good yields partly compensated for the low price.
Hold grower
The idea that Dutch arable farmers 'plant potatoes anyway' is not entirely justified. The potato processing industry has had sufficient and cheap raw materials available in the past year. This has been at the expense of the farmer's crop yield. In that sense, it will be interesting how the market will develop further this season and what the industry will do, for example, with the contracts to keep the grower interested in potato cultivation.