As with the contracts for chips potatoes, more is also paid for starch and flake potatoes. The German processor Emsland Group has announced this. The growers also benefit from a special allowance, which the company introduced after the dry summer.
Emsland Group made late August 2018 known to create a so-called 'Rohstoffsicherungsprogramm' for the 2018/2019 and 2019/2020 campaigns. Thanks to this measure, an extra €30 per ton of potatoes will be paid after the extremely dry summer. The amount will be paid out immediately in the current campaign to improve the liquidity of the growers. In addition to this arrangement, the contract price for 2019/2020 will also be increased.
Financial effort
Both the affiliated growers and Emsland Group are satisfied with the settlement, although the group emphasizes that this is a one-off emergency plan. The financial effort is significant and it has ensured that almost all growers have delivered all their potatoes to the factory. It also ensures that Emsland customers can receive optimal delivery.
In addition to this drought allowance, the basic price for starch potatoes will increase in the 2019/2020 growing year. This increases from €60 to €65 per tonne, at 19% starch. Emsland Stärke then has a number of surcharges on top of this price. For example, there is a compensation for transport, reduced tare percentage and a storage fee.
In addition, the company pays a so-called 'Marktausgleichsprämien'. The company budgets this premium for the campaign in agreement with the growers' association and can be reduced later, only in emergencies. Emsland Stärke GmbH has already paid €7,60 per ton premium in addition to the Rohstoffsicherungsprogramm for this campaign. The company estimates that the final price will be even higher.
Post payment
The price structure makes it difficult to compare the price of starch potatoes from Emsland Stärke with that of competitor Avebe. Both have a supplementary payment. At Avebe this is called the performance price, which also includes the company's results. Emsland Group is an AG (Aktiengesellschaft); This public limited company has shares.
Growers who want to supply are required to buy shares: 1 share costs €400, which gives you the right to supply 27 to 30 tons of potatoes according to your individual wishes. In addition to the potato price, a guaranteed dividend of 5% is paid on the shares. The shares thus pay for themselves. The growers' association Erzeugergemeinschaft für Industriekartoffeln im Emsland und der Grafschaft Bentheim (EZG) offers growers who want to get involved a financing scheme for the purchase of shares.
Financial results
Emsland Stärke has its annual meeting on February 6 had and the figures for the 2017/2018 financial year were presented. This runs until June 30. In total, more than €20 million in profit (after tax) was achieved, of which approximately €3,8 million was paid out in dividends to the growers and the growers' association. Part is paid on the growers' shares and another part goes to the growers' association.
The final average payment price for the 2017/2018 campaign for starch potatoes is an average of €85 per tonne (20% starch). The price includes a small share of storage premium, because the group had a fairly short starch campaign (until January). There is also a transport cost surcharge. The group's annual result (over €20 million) has not yet been included in this grower price for the 2017 harvest.
Flakes and granules
"In addition to starch potato growers, growers of flake and granule potatoes can also benefit from the price increase for 2019/2020," explains CEO Gerrit-Jan Wesselink. "When growers compare contract prices with other providers, they must (from 2019) also take the market price premium into account for flake contracts. This will be paid 1 year after the harvest." A one-year contract can also be concluded for flake cultivation. Furthermore, the basic prices and the transport cost surcharge will be increased.
"The price increase for 2019, of €5 per tonne of starch potatoes on the basic price, and a further increase over the market price premium is required. This is because the cost price is increasing and alternatives are getting better," Wesselink explains. "To maintain cultivation, the basic price must be increased. Also to remain competitive compared to flake and chip potatoes. Our growers appreciate this. Confidence is good. We have good varieties in our package, which are in this area fits well. We think we can grow in area and volume. There are also opportunities in the Netherlands."