The potato click contract as an opportunity for growers to take advantage of market waves (volatility) goes back many years. Aviko came up with it long before 2010, the click contract was partly devised with the former LTO arable farming foreman Jaap Haanstra. The idea was that a grower would keep part of his potato area free in terms of price formation and fix it during the season based on his own insight and the price of the potato futures market, but would physically deliver the potatoes to, in this case, Aviko.
Basically, the grower sets up his own pool with the aim and if the possibility exists to beat the fixed price contract. Now the fixed price contract has been significantly increased in recent years, but this also applies to the futures market level. For example, the futures market level in the months of June (start of the new clicking season) and July 2024 was between €35 and €40, which means that a considerable amount of volume has already been secured above the average contract price. What the rest of the season will bring remains to be seen, but everything that "clicked" above the €35 level has already been included in the outcome of the average payout price.
After Aviko was the first party to offer the click contract to its growers, its success led to a spin-off, which later led to other customers, including Nedato and Farm Frites, also offering click contracts to this day. The available data shows that the average click price level in "normal" seasons was higher than the average contract price level in terms of price movements and expensive years. In the price-wise bad years (3 times in the past 10 years), the score was (logically) worse than the fixed price contract.
One of the customers (McCain) came up with another derivative of the click contract, called the Personal Pool System (PPS). Growers were able to divide the volume introduced over 5 blocks throughout the season. So in the case of, for example, 500 tons, 100 tons were clicked each time. If the grower did not do this for some reason (click) during a period in question, this 100 tons was fixed at the average closing quotation in the week before the end of the period. This contract form is currently no longer offered by the processor mentioned, despite the fact that the returns turned out well for the growers, even better in a number of seasons than the click contract. Eliminating the grower's own insight with the aim of "beating" the market has worked in many cases!
The click contract is inextricably linked to the potato futures market. The price trend of the futures market determines at which level you can click (lock). In that sense, the future of the click contract is related to that of the potato futures market. And the future of the futures market is uncertain. Due to the significantly changed structure of the potato market over the last 15 years, whereby intermediaries have been minimized and processors do business directly with growers who have, in many cases, grown significantly, trade is still minimal. This does not make it any easier to interpret the market through the different quotations in Europe (think of PotatoNL and Belgapom, for example). After all, there is no real trade anymore when it comes to chip potatoes.
Another good example is the PAT list that can be found at Boerenbusiness. With regard to the PAT list, processors established on Dutch soil have entered into an obligation, under the supervision of the BO (Branch Organization) Arable Farming, to report all transactions that fall outside the fixed price contract. The reported transactions therefore concern the basis of the free market price. From January 2024 to date (end of July), this has only been 45.000 tons, more than a paltry 2% of what was processed in the Netherlands during that period! The conclusion is that there is little to no free trade anymore when it comes to chip potatoes and that it is a major challenge for the sector to arrive at a somewhat acceptable and substantiated price quotation, as mentioned earlier.
Developments in the market in recent years have not made things better for the potato futures market. In addition, of course, the party (Saxo Bank) that facilitated the financial settlement of the contracts has discontinued its services. The current remaining trade is today facilitated by ADM Investor Service BV. More professional parties from larger growers to processors can trade easily this way. However, this does not apply to the often smaller speculative customers. It is precisely this last group that has been strongly represented on the potato futures market for many years.
After the withdrawal of Saxo Bank last season and the resulting extremely difficult futures market season, this season (2024/2025) is also a difficult one. With less than 300 open contracts and the month of August in the picture, the market is still not getting going. The possible result could cause the potato futures market to disappear if the necessary trade turnover is not achieved. This will also mean that the click contract will be defunct. In addition, the various still active potato pools containing French fries potatoes will have to adopt a different strategy (if they were not already doing so), which is often based on air.