Potato growers who supply Mousline in France are in dire straits. The company is adjusting their fixed price contracts for this harvest year to, according to the company, "anticipate the difficult economic situation." Therefore, the company is asking the northern French growers to make sacrifices. This sends the message that even a contract isn't sacrosanct.
Potato growers who were able to secure fixed-price contracts with their buyers this season feel safe in the extremely volatile market. The French company Mousline proves that a contract doesn't always offer 100% security. Volume is still guaranteed, but the price isn't entirely guaranteed.
Less on fixed price
This escape was already built into the delivery contract. A fixed price for potatoes with a high dry matter content is guaranteed for up to 90% of the volume. The portion from 90% to 105% includes the option of a flexible price, which the company has now opted for, as revealed in a letter to the 130 growers. Boerenbusiness got his hands on.
The company cites the difficult economic situation as the reason for this decision. Both consumption and the sales prices of the potato powder packets are under pressure. The company says it is trying to achieve a better balance between the potato price and the sales price.
Investor
Mousline was founded in 1963 and is located in Rosières-en-Santerre in the Somme region of northern France. Decades ago, the company was acquired by the Swiss food giant Nestlé, which put it up for sale in 2021. A year later, Mousline was acquired by the French investment company FNB, which owns a portfolio of various national food businesses, ranging from herbs and sausages to cheese and mashed potatoes.
The new owner is busy polishing up the brand. Through a public investment platform, which allows everyone to participate in the company, raised €1,13 million earlier this year. Mousline claims to hold 70% of the French market for puree. The Netherlands is also an important market for the company, where packets of puree powder are available in all major supermarkets.
Sacred contracts
At the end of March, Belgian processors made headlines when, late in the contracting period, they tampered with the volumes on paper. This angered growers and Belgian advocates. Ultimately, the decision (seemingly) fizzled out. It's unusual for these "sacred" contracts to be amended retroactively. In Mousline's case, this possibility already existed, so there was no breach of contract.
This certainly isn't the first time potato contracts have been controversial. It happened in 2018 as well. Back then, growers were looking for space, particularly those who could deliver the agreed-upon volume. If the market for fries and other potato products remains under significant pressure, it might not be the last time a factory chooses to reassess its previously made agreements. Not for the current season, but for next year.
Caught
Processors are also "trapped" in a contract. While they theoretically have access to the raw material, the pre-guaranteed prices are in stark contrast to the current free market, which allows most companies to unintentionally keep their costs high. That's the crux of the matter.