Shutterstock

Analysis Potatoes

Ground zero reached, potato market comes to a standstill

16 April 2025 - 27 comments

This week too, the potato market seems to have no bottom. Where in January the trees seemed to grow to the sky (especially for the Innovator variety), today the potato market is a deserted plain. This past week it became painfully clear that there is a major flaw in the current system of the potato market.

Would you like to continue reading this article?

Become a subscriber and get instant access

Choose the subscription that suits you
Do you have a tip, suggestion or comment regarding this article? Let us know

A potato market that is/was based on an infinite growth of the sales of fries all over the world combined with an infinite expansion of the processing capacity in Europe, followed by an infinite growth of the potato area supported by contracting as much as possible in advance at profitable prices.

Market experts warned
For years, market experts have warned against excessive contracting of potatoes for the formation of the potato price. Due to the large number of contracts, a little too much or a little too little has a great influence on the price development. This was partly masked in recent years by the increase in sales of fries plus the moderate harvests of the past three years.

Due to the limited yields and good sales, it was always possible to price the free potatoes in quotations. Despite the limited number of transactions, a quotation always appeared on the board. Now that all the coins are rolling in the wrong direction, it is painfully clear that the potato market is at a point that can best be described as ground zero, an economic zero point at which the market has come to a complete standstill. In this context, ground zero means: no trade, no transactions, no demand and no quotation. The dynamics have disappeared. What remains is emptiness in movement and price.

Situation very worrying
The current situation in the potato market is worrying. French fry sales have been lagging behind for a whole season (see the graph below, where the data for January and February 2025 is based on the currently available data). With the emergence of a trade war and a calmer demand for European French fries, the processing industry seems to be heading for a decline in sales for the first time in years. Especially now that all major processors have focused on further expansion of capacity.

Source: DCA MI Potato Platform (based on available data)

In the short term, this means that many processors have sufficient (or too much) coverage of potatoes for the entire season, just from their contract potatoes. If nothing changes in the sales of fries, processors will have to buy little to nothing more on the free market. And this became painfully clear again this week, because after Belgapom, Viaverda and the French RNM were also unable to announce a listing due to a lack of transactions. This is particularly striking for the Belgian listing, because Belgian processors often have lower coverage (fewer contracts) than Dutch and German processors.

The Dutch listing (PotatoNL) is still there this week, but is not based on free trade but on potatoes supplied with the product. That has nothing to do with a free market. Belgian traders are fed up and are offering Fontane for €15 free without finding a buyer. For many processors it is therefore damage control time. The French fry sales, but also the French fry price, are under pressure and the prices of some specs are already falling below the cost price of processors based on contract prices (contract price potatoes + transport + frying oil + processing costs + packaging + labor). And where losses are incurred, it hurts. The exchange rate of the euro does not help either, now that the euro has increased in value against the dollar by more than 1% since March 2025, 9.

Price risk back to the grower
This means that the market is viewed completely differently now than six months ago, when the sky was the limit, contracting potatoes was a risk-free exercise and profit was a certainty. The best risk management strategy is to put the (price) risks back into the chain. And thus to put the risks back with the potato grower.

The problem is that the grower does not want that risk. His risks have actually increased due to an increased cost price, which is why the grower is looking for less risk. Placing the (price) risk elsewhere in the chain, as was done in the past with traders, cooperatives or futures markets, has been eliminated by the concentration in the chain to such an extent that that infrastructure has almost disappeared.

Then there is little left to do but to rebuild the potato market from ground zero, slowly and step by step, as is often the case after a moment of shock.

Call our customer service +0320 - 269 528

or mail to supportboerenbusiness. Nl

do you want to follow us?

Receive our free Newsletter

Current market information in your inbox every day

Login/Register