Surplus of 100.000 tons of potatoes looms

The fact that the potato price continues to fall without the lower price level leading to additional demand is very worrying and indicates a major problem on the sales side.

Threatening surplus of 100.000 tons without destination
Based on available market data, there is a threat of a structural surplus of at least 100.000 tons (!) of consumption potatoes in the Netherlands alone, with the end of the storage season in sight. These are not incidental batches, but excellent baking potatoes for which there is simply no longer a market. These batches are at risk of being disposed of as animal feed or fermentation, the last sales option within the sector.

Capacity problem is in sales, not in processing
The bottleneck is not so much the production capacity, which has only increased in recent years, but the sales of the end product. According to the most recent DCA Market Intelligence figures, the export of pre-fried potato products in the so-called EU-4 (the Netherlands, Belgium, France and Germany) is lagging behind the average of the past two seasons by more than 500.000 tonnes. Converted, this amounts to more than 1 million tonnes of potatoes for which no definitive destination has been found.

Remarkably, this reduced export volume is hardly reflected in the processing figures. The only logical conclusion is that the industry continues to process based on contracts that have already been concluded. This means: processing without direct sales, with the result that the end product ends up in cold stores for a longer period of time, awaiting better market conditions.

Frozen stock as a time bomb
The cold stores in Western Europe are now starting to fill up considerably. There is already active clearing: stored fries are being repurposed as animal feed, for example. The financial logic is clear: the storage costs do not outweigh the expected return in the long term. Processors could handle four weeks of standstill and yet the market remains saturated.

Based on current stock levels, potato processors in the EU-4 could easily be idle for several weeks without creating any real space on the market. In the meantime, factories in the EU continue to process an average of 300.000 tonnes of potatoes per week, largely on the basis of previously concluded contracts at historically high prices. This strategy – understandable in light of the market situation after corona – is currently, and possibly also for the coming season, very disadvantageous.

Early potatoes aggravate the problem
As if the situation were not dire enough, crop developments indicate that the early potatoes from the 2025 harvest will be available more than on time. Many of these early potatoes were contracted during a period when the mood in the market was very good. With the supply in the pipeline early, the pressure will be increased even more, while the figures indicate that there are problems in the distribution channels.

Conclusion: structural imbalance between contract farming and export demand
The current market situation does not seem to be a normal dip, but a structural imbalance between supply (driven by the contractual obligations) and demand (stagnated by declining export volumes). The overconfident contracting strategy of processors in recent years – both in volume and price level – prompted by the possible scarcity of raw materials and high end product prices, is now backfiring on the sector. Without renewed export impulses for the end product, a major problem threatens to loom for the 2024/25 season after the difficult handling of the 2025/26 season.

The growing season is still long and harvest risk is always a factor, but that is the only bright spot at the moment.