When money has to be distributed, it inevitably leads to discussion. The government compensation scheme for chip potato growers is no exception. Who benefits and who draws the short straw?
Now the government €50 million available proposes to compensate growers of chip potatoes for their damage as a result of the corona crisis, the question arises whether the money ends up in the right places. From the moment the compensation was announced (mid-April), the starting point has been that the compensation applies to French fries potatoes for which there is no longer a destination due to the drop in demand since the corona crisis.
Estimates are that approximately 1 million tons of potatoes that cannot be processed regularly are left behind the shelves of approximately 1.500 affected growers. They can do up to €6 per 100 kilos compensation received with a maximum compensation of €150.000 per company. Potatoes previously traded on the futures market are not eligible for compensation.
Lively discussion
A lively discussion subsequently arose in all sections of the Dutch potato sector. Because isn't the loss of the sales market 'just' the risk that comes with growing free potatoes? And vice versa: shouldn't contracted potatoes have been compulsorily purchased and therefore excluded from compensation? And what if you just sold your potatoes to a chip processor for next to nothing? And what about the potatoes that were still in the ground and should probably be considered lost anyway?
A discussion that André Hoogendijk, director of BO Akkerbouw, does not miss. “The moment it becomes clear that a compensation scheme will be introduced, this leads to all kinds of questions. What do I receive and does my neighbor not receive too much? And as is always the case with compensation schemes: there are entrepreneurs who are on the right side and entrepreneurs who are less successful.” Hoogendijk emphasizes that the compensation scheme is never full compensation. “It is a compensation for growers. I think we can be happy that there is an arrangement. €50 million will go to growers. Money that would otherwise not have been there.”
Preferably even simpler
The BO foreman is not only happy that there is an arrangement, but also that it is simple in design. “Of course there are things that we would have preferred to see slightly differently, but we are happy with the design of the scheme and the speed with which it was created.” If it had been up to BO Akkerbouw – and its members LTO, NAV, NAO and VAVI – the compensation scheme would have applied to all growers with potatoes in storage. “This makes the arrangement even simpler and prevents a lot of discussion about the destination of these potatoes.”
However, the government has explicitly chosen to exclude potatoes that are processed into fries, chilled products and table potatoes from compensation. This is to ensure that taxpayer money actually benefits the sudden surplus that has arisen as a result of the corona crisis. From a social point of view, this is understandable, says Hoogendijk, but it also causes a number of bottlenecks that are now being ignored.
Painful, but true
Growers who have sold potatoes for 2 cents for fries in good faith in the past period are not eligible for compensation. And yet potatoes sold for the same amount as animal feed yield 6 cents extra. “That is painful and was not our approach, but this was the choice of the ministry and we have to deal with it as a sector. In such cases it usually concerns co-delivery potatoes. We hear from processors that these parties are also regularly assigned the destination of animal feed or flakes. So as a grower it is good to find out what happened to it.”
Meanwhile, the sector is buzzing with rumors that existing contracts will be 'teared up' this period, so that growers with these potatoes can claim compensation from the government. Processors then source cheap potatoes from abroad to obtain raw materials for processing. The Vavi, the association of potato processors, agrees that in some cases contracts are terminated by mutual consent.
Indian stories
The fact that processors buy foreign potatoes for next to nothing while high-quality Dutch product is fed to the cows is for the time being described as Indian stories. According to Hoogendijk, there are currently no signals that this is actually happening on a structural basis. Regardless of the fact that large Dutch processors also obtain part of their supply from abroad under normal circumstances. “Furthermore, a processor also tries to limit its losses. This would have happened to a greater extent and with unpleasant consequences for growers if there had been no arrangement. But it remains that the scheme is only intended for growers.”
The same applies to potatoes that were still in the ground at the outbreak of the corona crisis, because they could not be harvested last winter. It is known that there are cases where growers have still made the decision to dig up these potatoes and not plow them under, and thus qualify for the 6 cents compensation. “The ministry did not want a separate agreement for this, because this would entail an additional burden of control,” says Hoogendijk. However, this only concerns a very small part of the potato surplus. This reportedly concerns a few cases in North Holland.
Only Dutch growers can apply
Regardless of the type of potatoes (pool, contract or free) and whether or not smart use is made of the compensation scheme, the fact remains that only Dutch growers can apply. They must prove that the potatoes were grown in the Netherlands (according to the Combined Statement) and that they were removed. Hoogendijk: “Because an alternative destination such as animal feed or fermentation can mean a longer settlement, we have deliberately chosen to allow the compensation scheme to continue for quite a long time until August 31.”
The final payment will therefore only take place after that date. Growers can expect an advance, but they must register before June 4 to be eligible for the compensation and make a realistic estimate of their surplus. The final settlement is made on the basis of the supporting documents: a weighing slip, CMR waybill and invoice. There is too much more about this can be found on RVO.nl.