Belgian stocks of frozen products are piling up. French fries factories processed a record amount of potatoes last year. In 2020 they went one step further with a larger capacity. Where should the products go now that sales have stagnated?
The Belgian potato industry set a record in 2019 by processing 5,3 million tons of potatoes. This continues the upward trend of recent years. In 2017 and 2018, 4,6 and 5,1 million tons were processed respectively. The processing figure in Belgium has doubled in 12 years. Our southern neighbors have already far surpassed the Netherlands. Here the processing figure is around 4 million tons.
Greater capacity
Given the expansion drive of Belgian factories, even greater potato processing for 2020 was obvious. Market analysts report that Belgian processors invested approximately €300 million in efficiency and capacity last year. In 2020, a total of 19 factories will be starting up, mainly producing frozen fries (2,2 million tons in 2019).
It is clear that there were plans for production expansion. But where should those products go now that sales have stagnated as a result of the corona crisis? Sales to the catering industry and events throughout Europe have virtually come to a standstill. Sales to distant destinations have also fallen sharply due to logistical problems, reports trade organization Belpotato. The increased home consumption does not cover those losses.
More than 30% stock 'worthless'
Because Belgian potato processors want to fulfill their contracts with growers as much as possible, stocks of frozen finished products are piling up. In the meantime, growers are still left with a lot of free potatoes. According to Belpotato, an initial estimate shows that this amounts to 30 to 35% of the current stock. These potatoes can be considered virtually worthless as a result of the corona crisis. The shelf life is limited, the storage season is already well advanced and there are no market forces.
Area in 2020
In the meantime, our eyes are focused on the 2020/2021 season. Belgian growers are busy planting the potatoes. The question is whether the consequences of the current market situation will have an effect on the future acreage. Analysts fear that reports came too late, meaning that plots have already been prepared and sometimes already planted. The total area in 2019 was around 98.000 hectares, 4.000 hectares more than in 2018. The area in 2020 will be lower, but the yield is still significantly higher compared to the dry season 2018-2019. Analysts expect production in the EU-5 to be around the 5-year average.
Belpotato reports that the contracted volumes have been adjusted downwards for a number of customers. For some specific markets, such as fresh fries, it cannot yet be estimated to what extent sales will recover. However, it is clear that due to the reduced sales at Belgian potato processors, there are high stocks of frozen products and flakes after the 2019-2020 season. This could mean that the 2020/2021 season will be shortened by 1 to 2 months.