After two 'corona years', in which the potato market was disrupted, there is now considerable dynamics. Although this has not really been noticeable in the price formation in recent months. The dynamic character of the market is formed because it may just be that the processors in the EU-4 can use more raw material than the growers want to grow in advance.
Just think about it; Despite the corona pandemic, global sales of end products declined in 2020, but sales have more than recovered in 2021. The potato grower, on the other hand, has had to deal with a lower potato price and/or contract price - after the market price drop from March 2020 and the contract round for the 2021/2022 season. Especially compared to the costs incurred.
Even today, the physical market, in which the top is determined by Innovator and the bottom by Fontane, is not yet running smoothly. The right word might be 'syrupy'. This 'viscousness' is the result of the lack of market forces. Why would the buyer pay more knowing that there is little competition in the way (read; that few people want to pay more)? This also explains the set-in-stone quotations in Europe, which only start moving when there really is no other option.
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Yet you would say that, due to the dynamics mentioned earlier, the winds of change will blow in the coming years. Under normal or even above-average growing conditions, there is a demand-driven market - given the hunger for raw materials - while the potato market in recent years has often been supply-driven. This conclusion gives potato growers a better starting position. This is also reflected in the contract prices for next season, which (especially considering the previous season) have increased considerably. This is also desperately needed in view of the cost price of cultivation.
But is the price offered also sufficient for growers? In Belgium, contracts are mainly based on tonnes. If the tons are not reached due to, for example, a dry summer, the buyer often buys extra at high prices. And then your intended positive operating result is gone. In the Netherlands, on the other hand, co-delivery potatoes significantly hinder the development of the market. Why would a buyer, or buyers, make a lot of noise in the market to drive up the quotations? The answer is obvious.
How does the relationship develop?
In the changing potato market, growers also have to keep a mirror in front of themselves. Chip factories are the customer of the grower, who must ensure a good product, delivered at the desired time. However, this form of 'relationship' has changed in recent years, often also due to the supply-driven market. The fear of a grower is that he will be left with his potatoes.
Of course, agreements must be made with the 'customer' and grower. The 'customer' wants to know where he stands when it comes to variety, volume, part of the price, quality, etc. But this should not have too much influence on the grower's final return per hectare, as it would be better for the grower to be on the customer's payroll.
The fact is that the grower always runs risks and it is impossible for him to pass them on to other hands, after all, he is an entrepreneur. The contract price level will be set higher by the processors for the coming year, but what does the grower actually know about the costs? In short; a complicated situation, in which all parties (grower and customer) are busy calculating, but are also busy considering what to do next season.
The processor peers at his spreadsheet, not knowing what the growing season will bring or what the sales of his end product will do. The grower is unsure about how he can balance his return versus his risks. One thing is certain: the further erosion of the free market and thus the value of the various quotations in Europe do not help the position of the grower. Whether this trend can be changed is a difficult question. The fact is that in principle the starting position (demanding market) of the grower has never been so favorable in recent years. But how to use this?