Potato processor Lamb Weston/Meijer has also presented its potato contracts for the 2022-2023 season to the growers. It is striking that the company is not going along with the price increase of €25 per ton of potatoes seen so far. So what will the price be?
"A difficult market for all raw materials", is how Jan Willem Sepers (potato sourcing leader) and Marc Verhooren (area manager north) the situation. "Both for growers and processors," says Sepers. "The costs of energy, transport, packaging materials, oil. Everything has become significantly more expensive." "In addition, there is the uncertainty of delivery," Verhooren adds. "Today you can no longer be sure that the products you order will actually be delivered on time. It helps that you are a reliable party that pays correctly and on time. This is also how we approach the growers and that is appreciated, we notice."
€30 price increase
The company realizes that growers are also facing a significant cost increase for next season's cultivation. What makes it extra difficult is that every grower has his own cost price. "We have chosen to implement a price increase of €30 per ton of potatoes across the board," says Verhooren. "This applies to all (common) varieties and delivery periods. In addition, the price difference between Fontane and Innovator has increased slightly, to the latter's advantage."
LWM has had a strategy for years to store potatoes for a long time and therefore rewards companies with mechanical cooling. That premium remains unchanged. From week 17, growers will receive €5 per tonne. Subsequently, one euro is added per week. The seed potato prices remain the same as the previous season. The other conditions are also unchanged. LWM pays the contract price from 40 millimeters upwards and charges the 35-40mm at the daily price. The potato tare is also paid at the contract price. Weighing fees have been abolished.
Growers can commit a maximum of 40 tons per hectare to the fixed price contract. For irrigated potatoes this is 45 tons. In addition, other contract forms are possible.
Fontane and Innovator
What does it actually come down to? Last season prices fell, depending on the delivery period, by €0,40 to €0,80 per 100 kilos. With the current increase, Fontane will amount to €37 in week 12,00 (from land). On week 17 this is €18,30 and in week 26 it is €21,90. At Innovator the prices in the three periods mentioned are €14,25, €20,55 and €24,15. Please note: These are the contract prices including the compensation for mechanical cooling.
In contrast to the previous season, LWM would like to contract more tons of potatoes from its growers. There is also room for expanding the area. The company is expanding its French fries production in Kruiningen, but this will only require additional potatoes for the 2023-2024 season.
The price of fries
"The dynamics in the market are great and optimism prevails among growers," Sepers adds. "It remains to be seen what this will do to the acreage in Europe. We are coming off two special years. In 2020, as a processor, we really saw black snow when almost no more fries were sold and produced. Yet we have been able to fulfill all our obligations to growers. complied with and paid for properly. No one would have thought that the French fries market worldwide would recover so quickly." "The question is what the maximum price of fries may be," Verhooren adds. "Extra efforts that have to be made by the entire chain must ultimately be paid for by the market. Every link must be able to earn an honest living. This works much better in a stable and healthy market."