As is often the case, the Belgian processors set the tone when it comes to the average level of contract prices towards a new season. In the past it was Clarebout who, especially in the year that the Interpom was organized (mid-November), was the first to come out with the contract prices, in recent years it has often been Agristo that sets the tone. This also applies to the 2022/2023 season. Apart from Aviko, who was the very first to issue the contracts in Europe, the other processors in both the Netherlands and Germany are still not very active.
It is clear that there will come a time when processors will have to bare their butts, but whether they will follow Agristo's 'course' remains to be seen. The signal from the Dutch processors in particular is that the contract price increase that has been implemented is considered significant, with a start in week 35 of €35 per 12,25 kilos for the largest Fontane variety (note 100 mm!), rising to just over €18,00. .12,50 in April. By the way, Clarebout also announced his contract prices just before New Year's Eve. For Fontane, for example, these increase from €100 per 37 kilos for week 20,50 to €2023 in the first half of June XNUMX.
Other contracts in Belgium and the Netherlands
Belgian processors are in a different position when it comes to purchasing potatoes. Contracting generally concerns tons per hectare, so a grower must make an assessment for himself whether he will actually harvest the volume. If the harvest turns out to be disappointing afterwards, as was the case in the 2018 but also 2020 harvest year, this could have negative consequences for the grower. After all, the processor has to buy additional potatoes, which is then done at the expense of the 'supplier'. Such constructions are not used in the Netherlands, which works to the grower's advantage in terms of risk management. The so-called force majeure clause comes into effect if the obligations cannot be met for valid reasons.
Unlike the Dutch, Belgian processors do not really talk about the phenomenon of 'along-delivery potatoes'. If a grower wants to sell potatoes outside the agreed contract volume, he is free to do so. In practice, this part of the potatoes often goes to the regular customer. That part is then generally settled on the Belgapom quotation, which is put on the board by the processors themselves every week.
Market price for liver potatoes
The fact is that the functioning of the free market has diminished over the years. The potato trade in Western European countries is still a limited factor in the chain, so that in many cases growers do business directly with the processor. Deciding on a prize is no longer an exciting affair for a large part of the season. The various stock exchange quotations in countries such as Germany (Reka), the Netherlands (PotatoNL) and Belgium (Belgapom and PCA/Fiwap) are used as a guideline, but due to the lack of 'real' freely tradable potatoes, things have become fairly predictable in terms of market price developments. A tour of the fields (read: growers) shows that one has a good idea of this development in terms of predictability and elasticity of the market price and that this does not benefit confidence in potato cultivation when it comes to returns per hectare.
It is therefore interesting to follow what the area in the EU-4 countries will do in 2022. In other words: will the contract prices be increased sufficiently to allow the area to grow with the needs of the processors or is the risk of potato cultivation perceived to be too great based on the fixed price contracts in combination with how the market price of the remaining part of the potatoes is determined.