Starch and flake producer Emsland Group is increasing the potato prices for all potatoes supplied by growers this season. Those who are able to deliver more potatoes than average will receive an extra bonus. On the other hand, the processor also wants something in return from the grower. Both this season and in 2023.
In 2018, which was also extremely dry, Emsland Group – with eight factories in West and East Germany – launched a 'commodities insurance programme'. Unfortunately, that is also necessary this year. Prolonged drought affects the hectare yields of starch and flake potatoes in Germany and the Netherlands. "We do see regional differences," says CEO Gerrit-Jan Wesselink. "Some areas received more rain this season, but being able to irrigate or not also makes a difference. This does not alter the fact that irrigated plots also have a below-average yield."
Four steps
The support package that Emsland Group has presented to their growers is not entirely comparable to four years ago. It consists of four steps. Growers are free to participate in this. The conditions for participation are that all potatoes grown this season are delivered to Emsland and that the arable farmer also secures the same volume with the processor in 2023.
Integral price increase
Step one is an integral price increase for all tons that will be delivered. This amounts to €15 per tonne of potatoes. In February elevated Emsland already has contract prices for flakes and starch and granulated potatoes at €12,50 to €20 per tonne. In doing so, it pays out the highest contract price in its history. Growers who deliver more product than the factory average receive a surcharge of €25 to €35 per tonne for these potatoes. Wesselink explains: "Anyone who delivers more potatoes than average has usually put in extra effort, such as irrigation. We reward that with this bonus. The average contract filling is determined per factory."
Step three is a contribution towards the transport costs. Emsland does not reimburse the full transport costs, but pays a contribution. This is slightly increased. Finally, from 1 November an energy allowance will be paid for the electricity costs. This amounts to €0,03 per tonne per day. Wesselink: "We know that many companies' fixed energy contracts expire at the end of this year. They then have to deal with significant price increases that are not included in the cost price. To meet this, we are introducing this compensation."
The program has been drawn up in consultation with the 'Erzeugergemeinschaft'; the growers' organization of Emsland growers. The members are free to participate in the program and therefore also to grow the same amount for Emsland in 2023. The company relies on the honesty of growers that all potatoes are delivered and also monitors this itself.
Contract price 2023 up
Wesselink is already certain that the contract prices will go up again next year. He can't name the exact price increase yet. "This depends on a number of factors. We are looking at the economic conditions at the beginning of next year and the perspective of competing crops. We respond to this with a current price at that time. The cost price is of great importance to our company for the contract price in 2023."