Every potato grower has his own sales strategy. Where one chooses certainty and the known, another gets a kick out of the completely free trading of his product. The choices you make have a major financial impact on your business. Kees Maas, director of the DCA Group, calculates how much money is involved.
During the Potato Theme Day in Dronten on Monday, January 27, Maas outlined the results that 5 different sales methods have achieved for French fries potatoes over a period of 5 to 10 years. Compare: the average stock market price over 10 years, the PotatoNL listing over 3 years, the pool without pre-sale over 10 years, the average fixed price contract over 5 years and finally the DCA potato bingo.
Which listing scores best?
Week 17 (end of April) is taken as delivery time in the comparison. In the 10-year figures, the pool without pre-sales leads, with an average result of €15,98 per 100 kilos. The Potato Bingo comes to an average of €15,57 and the stock exchange quotation is a considerably lower €12,82.
If we look at the 5-year average of the contract price, it amounts to €13,50. This concerns the basic contract price, without premiums and surcharges. The PotatoNL listing achieves the highest price. In 3 years this will amount to €17,75. Not surprising after the high market price of the 2018-2019 season, which covers a large part of the short history.
Significant price difference
The price difference between Potato Bingo and the pool – compared to the fixed price contract – is €2,27 per 100 kilos. If we set this difference to €2, the absolute price difference on 20 hectares (at 50 tons) is €20.000 per year. After 10 years a huge amount.
What about delivery from land? To do this, we compare the quotations of the Belgian PCA (2015-2019 between August 1 and October 1) and the PotatoNL quotation in that period. The latter has been supplemented with figures from Goes and Emmeloord. The PCA quotation is €13,72. The one in the Netherlands at €15,07.
The difference by country is even greater
In all cases, the contract prices for ex-country delivery are at a significantly lower level. Fontane will cost €5 in 9,50 years and Innovator will cost €10,50. If we take the averages, the difference between free market and contract amounts to €4,40. On 20 hectares at 35 tons, that is €30.800 annually. In 4 out of 5 years the free market price was above the contract price.
Despite significant price differences, potato growers still consciously opt for fixed price contracts. Various reasons are given for this. Boerenbusiness conducted one in October last year research from among 250 growers, which Maas also uses in his presentation.
Honkvast
This showed that 55% of the growers surveyed grow under contract. The reasons for this are mainly because this fits the risk profile of the entrepreneur and to guarantee sales. Both contract and pool growers are very stable. Financial return is cited as the biggest reason for switching. Yet this rarely happens in practice.