All the potatoes from the 2023 harvest have not even been harvested and the new contracting round for the 2024/25 season is just around the corner. For the 2023 harvest year, contract prices had been adjusted significantly upwards compared to previous years. The enormous hunger for raw materials to satisfy the significantly increased processing capacity in the EU-4 countries was the cause of this. Growers certainly had to continue to grow the desired acreage of potatoes given the significantly increased costs.
The higher contact price strategy has basically worked out well. Even growers who were more used to growing freely in one way or another could not resist the temptation to contract (more). According to insiders, the total volume of acreage that is in some way determined for the 2023 harvest in the EU4 countries is 85%. Then we are talking about both contracts and pools.
It is absolutely a fact that the increased contract prices for the 2023 harvest year were well received by the growers when they were announced. After all, a more guaranteed business income was the result. However, when late spring turned into a persistently dry June and the market price of the old harvest (2022/23 season) exceeded €50 per 100 kilos, growers in some cases began to wonder whether the contracts were the safe haven. It is mainly the Belgian processors who conclude contracts based on volume (tonnes), which must then be able to be delivered! Later in the growing season, everything seemed to be back on track and the crops made a rapid development, resulting in an above-average potato harvest in Belgium and France. The average market price for fries-suitable potatoes in mid-October had now dropped to approximately €12 per 100 kilos.
Not everything cleared
The fact that the collapsed market price in the EU-4 countries did not cause much of a stir was also because most potatoes were and are delivered on the basis of the excellent contract price. Currently (second half of November) the situation has changed considerably due to the persistent rainfall. In Flanders in particular, where growers have waited a long time to start the harvest, a substantial portion of the potatoes could remain in the ground. This also seems to be the case locally in the Netherlands and France. In Germany, the potatoes would have almost been harvested.
In short: another potato season with quite a few chapters in the book. The statement is certainly true that contracting potatoes is one thing, but growing the potatoes and therefore safely off the land and/or barn is another. In addition, contracting for next season - which assumes that the processors' proposals will be 'price-based' (read: comparable to or even slightly higher than the 2023 harvest year) - is an excellent basis for the arable farm's income.
Buffer zone
The result is that a potato market is emerging that cannot absorb many blows. Just look at the market price development in recent months from €60 in week 26 (Belgapom) to €10 in week 38. Due to the extremely limited percentage of potatoes outside the contract volume, there is certainly this season and, if nothing else, also in the coming seasons. virtually no 'change' to even speak of a potato market. Think of it as a river without floodplains. If there is too little rain, the river will become dry and shipping will be limited (read: the free market price will shoot up to €40+). If there is too much rain, the water will run over the dikes. and the cellars are flooded (read: then the surplus of free potatoes drops to €10).
Ultimately, the market for chip potatoes in the EU-4 countries also appears to be moving towards the American model (desired by a number of processors from that part of the world). However, it may be forgotten that the difference (volatility) of the annual hectare yield in Europe (which has a maritime climate, especially where potatoes are concerned) is considerably greater than the difference in the annual hectare yield (approximately 3%) in North America. The question is whether the so-called American purchasing model will ultimately succeed. It is the Belgian processors who have set the pace on many fronts in recent years, followed in the Netherlands and to a lesser extent Germany. You could almost say that the high yield variations in the EU-4 countries make it almost impossible to secure more potatoes. In that sense, for a more stable market price development, a substantially smaller proportion of fixed price contracts would work better. Whether processors also see it this way remains to be seen, growers seem to be able to supply (still) well with what is offered on fixed price contracts.