An advance payment for pool potatoes of the smallest possible amount above zero euros, or a bill exceeding €1.000 in transport costs for a rejected shipment of potatoes in France. These are issues that potato growers are currently facing.
The advance payment for a full load of potatoes in one of the largest pools in the Netherlands is barely thirty euros. It can't be any smaller, because the financial systems can't handle it. For now, a pool grower has to settle for €0,001 per kilo. You wonder how much bill that would cover.
On the other hand, the buyer apparently sees no way to set a decent price for a valuable commodity at this time. This is also a problem because the potato futures market no longer plays a significant role. Normally, this instrument could have provided a safety net. However, due to a lack of trading on the futures market, this is no longer the case.
The fact is that the market price for free-range potatoes is barely above zero. At least if you consider the main component, which consists primarily of the Fontane variety. In France and Belgium, prices are reported ranging from €0,50 to €1,50 per 100 kilos for this variety. Belgapom is quoting unchanged this week at €1,50 per 100 kilos. In the Netherlands, the market for this variety remains quiet, which is why PotatoNL still doesn't list prices for the main variety in French fry production.
Reduce stocks
French fry producers are nowhere near operating at full capacity. Processing breaks are longer to ensure they don't produce more product than absolutely necessary. They're all trying to gradually reduce their inventories. Expensive fries, the quality of which leaves much to be desired, are still everywhere in the cold stores.
French fries, partly produced from potatoes that weren't actually suitable for them. But then again, that dates back to a completely different time. A time when the sky was the limit. Fearing missing out on market growth, every effort was made. The sector is now reaping the bitter fruits of that.
Lends of leniency in case of rejections
Although the potato market is experiencing unprecedented sluggishness, there are also encouraging developments. For example, contracts are generally being honored, even though the purchase of potatoes is sometimes postponed for weeks. There are rejections, but even then, there's some leniency. For example, growers are sometimes saying they don't have to deliver new potatoes for that load and are still being paid the contract price.
And contracts have also been bought out because the buyer already has more than enough potatoes to meet demand. Even leftovers within a contract are occasionally bought out for the agreed-upon price, because buyers no longer send a truck for half a load.