Aviko ATC: 'It's five to twelve on the futures market'

How does the pool use the futures market and what impact does the current situation have on your sales strategy?
AB: "The same applies to the pool: we need a barometer to gauge the mood of the market. Otherwise, you might as well stick your finger out the window, so to speak. The same applies to the lack of the PotatoNL listing. It is unimaginable that we still do not have it in mid-November. Look, the current contract prices are cost-covering and we have been able to achieve high pool prices in the recent past. A well-functioning futures market and a physical potato listing are crucial for this."

Haven't times simply changed and is a potato futures market no longer appropriate in this day and age?
HW: "We hear that remark quite often at ATC. My reaction is: If you do nothing now, you will reap the bitter fruits in the long run. The trees do not reach to the sky. We have had good years, but other times are guaranteed to come. That is precisely when you need the futures market. You can contract everything, but in February you do not yet know how a growing season will go. After all, we see the yield fluctuations becoming increasingly greater. This year illustrates that once again. The great risks we run as potato growers."

What does the lack of a potato quotation mean for Dutch growers?
HW: "The fact that there is still no PotatoNL this season is simply a disgrace. As the Dutch potato sector, you are giving up control and I find that worrying. I read and hear that growers should dig in their heels, but I do not agree with that. It is precisely by seeking rapprochement with each other that you will find a solution. There is a need for haste. When the three parties (growers, trade and processing) can agree that an independent third party will determine a price every week, without having any interest in it themselves, I think you are already there. This is common practice for eggs, pigs, dairy and many other agricultural products. Why can't it be done for potatoes, I wonder."

You say, we are handing it over as a sector. What exactly do you mean by that?
HW: "You could say that the Belgapom price is currently leading in Europe. In the Netherlands, potatoes are also settled on that basis. Traditionally, the Netherlands has always been at the forefront in terms of pricing and market forces. This is reflected in a significantly higher price. Also because we recorded a different quality here. It is an unhealthy development that we are dependent on other countries for our market formation."

What is the interest of the processors for a futures market. They want to buy potatoes as cheaply as possible?
AB: "I wouldn't say that. Of course, a processor looks closely at his cost price, just like a grower does. But your buyer doesn't benefit from it if you can hardly make any money as a grower. Investing in good storage, logistics, cultivation and more. The buyer benefits directly from that. This also provides raw material security in the long term. It is a capital-intensive sector and cultivation. There must be a fair reward for that. Every company is different - as we also see within the pool - but growers today need to make risks manageable and a healthy margin."
HW: "The sales market for potato products – mainly French fries – is a global market. All processors have seen their cost prices rise sharply in recent years. This has been compensated for by higher sales prices, but due to the relatively low price (compared to other countries), European processors have retained their lead. This is under pressure, however. It is important to all of us that it remains this way. You cannot achieve this without a futures market."

In addition to hedging on the futures market, processors use the instrument for click contracts. How does that work?
HW: "It is no secret that potatoes are bought by processors without actually using the futures market. In my opinion, that is undesirable. It feels like you are watching the concert in the stands without buying a ticket. A much larger volume of potatoes is settled on the basis of the futures market rate than is visible in the number of contracts traded. That has to change to do the market justice. Fortunately, the futures market has climbed to almost 700 open positions in recent weeks. The challenge now is to push through to at least 1000 units."

You are concerned, but what can you as ATC do to make a difference?
AB: "The lack of (futures) market operation has been a concern for the ATC for a long time. We have regularly sought out discussions with the Aviko management for this. They understand the urgency and see the problem. We hope that by bringing this to wider attention now, it will give rise to discussion. Preferably also within the Vavi association (editor's note: the trade association of processors). In essence, the recently published column is a cry for help. If, in the worst case, the futures market disappears, we want to have done everything we can to prevent that. As far as the stock exchange listing is concerned, our motto is: Talk to each other, keep talking and find a solution together. That is the only way to achieve results."
HW: "If the Netherlands still wants to play a role in the cash settlement on the futures market, haste is required."