Processor steps on the brakes, grower seeks certainty

In recent years, the focus has been on additional potato production opportunities. Processors were certainly willing to take a few more hectares. And where space was scarce, growers were happy to take the gamble of a few extra potatoes without an underlying contract.

Potato processors' substantial investments in expanding their capacity gave the impression that everything was going well. Growers were happy to capitalize on this, as potatoes have yielded a very good profit in recent years. And yes, it's not so hard to find a few more hectares, even if the land was less suitable or the lease price was a bit higher than usual.

Competitors helped into the saddle
Last year, we suddenly saw an extraordinary expansion, particularly in France and Germany, but also in Belgium and the Netherlands, where no expense or effort was spared to grow more potatoes. The consequences have proven disastrous; the market for free-range potatoes has been at a standstill all season. Where increased sales of potato products were expected, the market suddenly found itself absorbing fewer European potatoes. Price increases in recent years have made European products too expensive and helped new competitors gain the upper hand.

Processors are therefore cutting back on contract farming. Prices are falling, but fewer tons are also being contracted. The lower prices are affecting every potato grower, but the reduction in contracted tons is hitting some harder than others.

Slimmed down or no contract
Several growers in the north and east of the country have now been told by their buyers that they can't count on a contract for potatoes delivered to the field. And several large growers in the south and east of the country now know that they can secure much less in contracts with their buyers.

Most growers are still unsure. They have to wait and see what's in store for them. Some attempts are being made here and there, but nothing is set in stone yet. It's still early in the season, but for the uncertain growers, it would be nice if processors moved a bit faster than in previous years.

Belgian processor Agristo has already opened the door. Following an announcement last year that prices would be reduced by €4 per 100 kilos, the contract prices per week and per variety were announced this week. This also applies to the price overview for seed potatoes.

In Belgium, agreements were made last year with the Federal Public Service Economy to shorten the time between the offer of a contract and its actual conclusion. Growers have fifteen days to respond to a proposal, and the processor then has a maximum of fifteen days to sign the contract. This clearly represents a step forward in providing growers with clarity more quickly.

A good example is worth following. So the hope is that contracts can be processed quickly in the Netherlands as well, eliminating uncertainty for growers. Lower prices are frustrating, but once you're aware of them, you can decide for yourself what to do. Uncertainty is much worse.

Caution is the key
It's clear that growers are eager to keep some of their potatoes under contract, despite the lower prices. This isn't surprising, as the sharply increased costs pose significant risks. This is also reflected in growers' attitudes; they're considerably more cautious this year. They're more critical about renting additional hectares. "Let's see how it goes first" is the prevailing motto.

Growers in the border region also note that asking prices for land rent in Germany are rising sharply. One arable farmer in the Achterhoek region specifically mentions a rise from €1.400 to €1.800 per hectare. This means that land rent prices are out of step with the lower yields growers can receive from contract potatoes. This reinforces growers' hesitant attitude. Perhaps the land will become available at lower prices at a later date, as their colleagues are all in the same boat.