Concerns about quality are on the rise

The rise in the futures market is prompted by the rapidly increasing concerns about the quality of the potatoes and the question of what impact this will have on the market in the longer term. The quality problems mainly concern the Fontane and Agria varieties and concern hollowness and rot. In some cases, growers even report up to 15 to 20% hollowness in the potatoes. The problems seem to be particularly serious in 'Fontane country' Belgium. Processors are now wondering how to tackle this problem.

What to do with hollow?
Hollow potatoes cannot be seen from the outside, but cause problems during processing due to fries that are too short and/or fries with brown dots. Solving the problem technically in the processing line will reduce returns.

Furthermore, quality issues cause storage problems. Agria in particular is going to leak, which could endanger the entire party. In the short term, the quality situation is not good news for the market. After all, there will be pressure as in a number of cases growers choose to deliver the potatoes from the field and not put them in storage.

For the breed of innovator, quality problems do not seem to be much of an issue. However, the various trial harvests show that this variety, important for fast food, is heading for a moderate hectare yield. Innovator has experienced moderate development due to the cold spring and wet growing season. A number of trial harvests even failed in the extremely dry and expensive year of 2018! Processors who supply fast food chains are therefore concerned about whether there will be enough potatoes to meet the agreements made. A challenge given the sometimes limited length and disappointing kilos.

Little physical trade
For the time being, the market is still mainly busy with the harvest. There is hardly any physical trade because processors have to keep room in their position for potatoes with quality problems. This situation produces a market that feels like it is dying. Growers are at the mercy of what the processors want to pay. However, due to the interests in the market with regard to chip sales, a lower daily price is not an option and the supplied kilos are paid for between €12,50 and €14 per 100 kilos.

There seems to be no room for truly free product, even at lower market prices, and sales of flakes soon come into view. For processors, this is the crucial negotiation period for the new French fries sales season. Right now, negotiations are in full swing with supermarkets and wholesalers. A high futures market price helps with this and a low stock exchange quotation does not. Moreover, it sounds from the corridors that negotiations are going very difficult and that the large discount retailers in particular do not intend to pay higher prices for fries. Something that will put a damper on contract prices for the coming growing season and, above all, on making cultivation even more sustainable.