Ukraine is one of the largest potato producers in the world, with almost 24 million tons of annual production. Yet the country hardly plays a role in the global market and sees – or saw – the future in particular looks promising. The potato futures market did fall after the Russian invasion. What does the conflict mean for the potato market?
Ukraine has had a good growing season. It was far too dry in most surrounding countries, but the harvests in 'the breadbasket of Europe' were good. This also applies to potatoes. According to government figures, production increased by 15% (compared to 2020) to 23,8 million tonnes. That is 6% of world production. A gigantic amount that places the country, in terms of production, after China and India.
10% area by one company
But, don't let that fool you. Professional potato cultivation accounts for only 5%. Good for 23.000 hectares, of which one company (Myria) already owns almost 10%. The rest of the potatoes are grown by households. The Dutchman Willem Nammensma works for Myria as a potato specialist. He mainly fears a trade blockade in the ports, as he previously said The Telegraph.
With 42,5 million hectares of agricultural land - that is more than nineteen times the size of the Netherlands - the potential for cultivation is enormous, but the return is low. Both in terms of yield and financially. The average yield is 16,6 tons per hectare. What the sector has as a shortcoming is a lack of export opportunities. Exports to Russia have been at a standstill for years and, for phytosanitary reasons, the potatoes are also not allowed into the European Union. The country would like to see this change, but there is no prospect of this.
Ukraine is mainly a destination for seed and table potatoes from the Netherlands. The amount of seed potatoes that are exported varies. Last year it was 2.700 tons, one year earlier it was 3.850 tons. That was the largest volume since 2010. Potato cultivation is mainly clustered in Western Ukraine. Given the current development of the conflict, this is relatively 'favourable'. The east and southeast are the major grain regions.
Export figures for table and industrial potatoes are missing. According to international trade figures, the Netherlands was the third exporter to the country last year with more than 12.000 tons of potatoes. Half less than in the previous year, when the harvest was very disappointing due to the drought. The country imports most of its potatoes from neighboring Poland. Last year it amounted to more than 76.000 tons.
Processing industry
The country does not have a processing industry for fries. At least, not meaningfully. Virtually all potato products are imported. The sector in the country mainly focuses on the production of potato starch. A shortcoming is mainly that sufficient potatoes of good quality cannot be supplied all year round. To remedy this, the government subsidizes the construction of storage facilities. Companies received a 30% subsidy from the state last year, with which almost 160.000 tons of storage capacity were built.
That the potato futures market responded negatively to the news of the Russian invasion mainly due to the uncertainties it entails. On Friday morning, the EEX in Leipzig again recorded red figures and the April contract stood at €19,70. Actual exports probably don't influence the market, but the mood does. These are gloomy times for all of Europe and their allies.