Interview Bart Jansen
"Avebe would rather pay a record price in a normal year"
Avebe has increased the final campaign price for the 2018 harvest from €70 to €80 per tonne. Including premiums and surcharges, the group pays an average of a record high €90 per tonne for potatoes with a starch percentage of 19%. Bert Jansen, the CEO of Avebe, looks in an interview with Boerenbusiness with mixed feelings about the price. "We prefer to pay a price like this in a normal year."
The extremely dry weather of last year has had a major impact on the cultivation of starch potatoes. Ultimately, Avebe processed no less than 25% fewer potatoes than in previous years. The starch content was around 20%, which is in line with the multi-year average. The last potatoes were delivered to the factory in Gasselternijveen at the end of April.
How do you look back on the campaign?
"I think we got the most out of it. Fortunately, we noticed early on that it was going to be difficult, so we reacted on time. For example, in September, in close consultation with the members, we agreed that we would increase the campaign price. We also decided in November that we would distribute our financial result for the 2018/2019 financial year in full to the members via the performance price. This gives a boost to the cash flow for our member companies."
An average of €90 per tonne is a record price, but what does this say about the returns of your member companies?
"The campaign price is great, and the ambition has been to pay out above €90 for some time. But, in a normal year, then it is all very relative now. The results among our members are very different. Some companies have achieved a normal harvest, although they had to irrigate a lot. That makes the cultivation costs high. On the other hand, there are also companies that have only harvested 33% of the normal yield. No matter how high the campaign price is, you can never compensate for that. For a large part of the members, 2018 is a very bad year."
In an extreme year, starch potatoes can be interesting for other buyers. Do you have the idea that Avebe has processed the entire harvest of starch potatoes?
"Loyalty among members has been great. Of course you can never calculate it exactly, but we suspect that little has been leaked. In the statistics we can see that the deficit has not increased in the course of this campaign. That is saying something." In a crisis year, most members feel that they have to support each other and the cooperative."
What does a campaign like 2018 mean for the company Avebe? It has (it seems to me) a big impact if you process 25% less potatoes.
"We have to deal with different campaigns and harvests every year, so we certainly did not panic. However, we have never experienced it as extreme as last year. If you know that 25% less raw materials come in, then you have 2 options: keep the costs as low as possible and get the prices in the sales market as high as possible. We did everything we could and it worked out quite well. For example, we were able to invest at a fairly normal level this year."
- Bert Jansen
What did the campaign mean for processing in practice?
"Our largest factory in Ter Apelkanaal is already closed before Christmas. Some competitors always stop before Christmas, but for us that is exceptional. Our 2 German factories in Lüchow and Dallmin also closed earlier. The factory in Gasselternijveen was operational until Easter , also because we get our vegetable protein there Solanic produce."
Closing a factory earlier costs money. How does Avebe manage to keep costs down?
"You indeed have a loss of understaffing, but we have therefore mainly looked at which costs can be reduced without harming the organization. For example, we have not filled vacancies, we have been careful with incidental costs for travel and accommodation and we have not hired people or temporary contracts have been phased out. We will of course assume a more or less normal campaign for the coming financial year."
Have you succeeded in raising the prices for potato starch and protein products at your customers?
"We succeeded well in that. An advantage was that not only we, but also our competitors had to deal with less stock of raw material. Then the mechanism of supply and demand starts working. We could also replenish our stock with the remaining part from the good 2017 harvest. We are benefiting from the growing market for meat and dairy substitutes with Solanic and starch derivatives.Our financial result for the current financial year is therefore positive. the members, so overall our performance price is above €90 per tonne. How high that will be remains to be seen."
How did the 2019 campaign year start? Was there sufficient seed potatoes available?
"The planting went well (with the favorable weather). The availability of seed potatoes was exciting, but in the end we were able to deliver everything. To be honest, I must say that the available quality and sizes sometimes left something to be desired. By no means all growers got the varieties they wanted. With some tweaking and pushing, that eventually worked out. Everything is finished. What was very nice in this difficult situation is that we have our own seed potato breeding company with Averis."
The current growing season starts relatively dry. How's the mood?
"We are talking with our members about the upcoming campaign. In addition to the availability of seed potatoes, we are also looking at the availability of water. The drought of 2018 has left its mark. The water supply is limited, especially on the higher sandy soils in the Netherlands and Germany. a lot will depend on the growing season. Despite the relatively dry start, there is not yet a meaningful word to say about it."
Eric the Thrush
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