The potato contract prices for the 2023 growing season reflect the current potato market, which is characterized by strong demand for potatoes and end products. Lamb Weston/Meijer is therefore increasing contract prices across the board by 20% to over 40%. 'The atmosphere among growers is excellent, he can now earn money,' says potato sourcing leader Jan Willem Sepers.
Sepers is positive about the sales of the end product this season. The expectations for 2023 are also good for the time being. "Lamb Weston/Meijer is strong in the premium segments, but sales are good across the board. The high chip prices are reflected in the contract prices. The prices we are now communicating do justice to the market situation and offer prospects for the grower. "
More expensive potatoes, higher storage fees
For field delivery of the main harvest (week 37), the company pays €17 for Fontane and €19 for Innovator. In week 17, that price level rose to €25,05 and €27,50. At the end of June (week 26) the prices will be €27,07 and €29,07. "From the end of April, a storage fee for mechanical cooling has been included in the price level," Sepers explains. "We see that week 17 is a turning point for the use of mechanical cooling. Because the value of the product increases significantly, we have also increased the storage fees. Simply to cover this (financial) risk."
LWM does not offer a discount for potato tare and does not charge weighing costs. However, a length premium is applied. "It has been adjusted that the 35 to 40 mm now also falls within the contract price," says Sepers. "After taring, payment is made within two weeks, which we are proud of. The family feeling is very important to us. We aim for a partnership with the grower and a long-term relationship to continue growing together."
Return
In exchange for the prices mentioned, which the purchasing director calls 'well above cost price', the potato processor asks for commitment from the grower. "This means that all potatoes are delivered back to us. Growers can agree to 40 or 45 tons per hectare on a fixed price contract, depending on whether irrigation can take place. The volume above this is also supplied to LWM, but an alternative price methodology can be used for this in consultation. "That is not a new provision in our contract."
What is new is a bonus system for large arable farmers with more than 100 hectares of chip potatoes. "They receive a bonus on the entire volume, which increases in a graduated scale to a maximum of €5 per tonne." A grower can immediately agree on the number of fixed tons with his field supervisor. We do not redistribute the volumes at a fixed price later. This gives everyone an opportunity to conclude a fixed price contract for the above price levels," Sepers assures.
To grow
The company hopes to be able to grow in volume throughout the entire cultivation area in Northwest Europe (the 'Hafpal area'). Consciously, because of risk spreading. Sepers: "Last season, this geographical spread once again worked out well, because yields in Belgium and France were disappointing. We are looking for more hectares and more potatoes for the coming season. Further growth in processing capacity is planned for 2024. For the entire In the potato sector, it is important that the sales markets remain healthy. Inflation is a risk. What helps us in Europe is a favorable exchange rate of the euro against the dollar."