Rising costs industry risk for potato price

The potato processing industry clearly notices that the prices of important raw materials needed for the production of fries have risen sharply. For example, the quotation for palm oil, an important ingredient for the production of French fries, has reached a record.

Furthermore, the oil price has risen sharply and this has an impact on the transport of potatoes and the end product, but also on the price of foil in which the fries are packaged. In addition, the price of cardboard has now reached record levels and is even mentioned as scarce in the corridors.

Finally, high container prices have caused the total costs for French fries production and transport to rise to record prices.

However, sales of fries do not seem to be suffering. The most recent figures show that worldwide sales of fries are also reaching record after record and (regardless of the price) consumer demand for fries is high all over the world. Europe also benefits from the good euro/dollar ratio and the attractive location close to world ports.

It appears that the price of pre-fried product is close to the end of its elasticity, according to international buyers of fries. The only way to keep the fries marketable is not to let the price rise further.

Chip makers have no influence on the pricing of world raw materials such as palm oil and crude oil or container prices. It seems to be important that the purchasing price of potatoes should not increase too much, because this will be at the expense of the margin on fries and the sales volume.

A difficult task is that the harvest in the EU-4 is disappointing for Innovator and Agria, for example, and there are quality problems in the largest chip variety Fontane. In short: a market that will make or break.