News Annual figures
Avebe performance award sets a new record by far
Starch producer Royal Avebe has announced a performance price of €133,34 per tonne for the 2022/23 financial year. An absolute record. The amount is considerably higher than the €98,56 achieved a year earlier (which was also a record at the time). While the 2022 growing season had many challenges and a very different and more difficult economic climate. The same applies to the current financial year, in which it will be a 'significant challenge' to match the performance price in the current market.
In an explanation of the annual figures, David Fousert, CEO of Royal Avebe, calls the performance award a very strong result in a challenging year. "This performance award is unique in the history of Avebe. Even though we as Avebe went through a very challenging year. Consider the energy crisis, the more difficult sales of products, but also in cultivation due to the very dry year that members experienced."
Despite this, the cooperative paid out considerably more than the performance price of €105, which was communicated last year when the annual figures were published. But this increase was also desperately needed, says Fousert. "Ultimately, we were able to properly pass on the increased costs and we also had to reduce costs. For example, we said goodbye to some markets, including the bulk paper market. We have paid our members 27% more and that is also desperately needed to to keep starch cultivation attractive."
Net turnover increased from €711 to more than €800 million in 2022/23. The total volume of starch produced was 10% lower than in the 2021/22 financial year and is mainly due to the dry weather conditions that affected yields. The quality was good and the starch percentage was 20,17%. That is just slightly more than the multi-year average of 20%. The basic starch percentage that Avebe takes into account in its contracts is 19%. For each additional percentage point of starch, an additional €6 per ton is paid out. Previously it was €5.
2023/24 full of challenges
The current financial year 2023/24, which is now four months away, is also full of challenges, says Fousert. The more difficult economic climate still prevails and product sales remain under pressure. The market perspective has improved slightly compared to earlier this season, but is far from comparable to what it was before. In addition, it was an extreme growing season and that has a major influence on the quality of potatoes and that not only leaves deep tire marks in the field, but also in the campaign. "This year the growers are struggling. It was a wet, late and cold spring and they also had a dry period during the growing season. Finally, the persistent precipitation during the harvest," says Fousert. Normally the tare percentage is around 5% to 6%, but now 8% to 9% is often measured, and in extreme cases double that. There are very big differences locally.
In addition, not all plots have been cleared yet and unfortunately that will not happen again. "Some plots or parts thereof have been abandoned due to the wet conditions." It is difficult to estimate what percentage is left, but it varies per region from a few percent to even 10%. The same also applies to the German regions where a lot of water fell. In other years the harvest is usually as good as over. The precipitation also does not benefit the quality and that is a point of concern. Some batches need to be processed earlier than planned, causing the campaign to run at maximum capacity, more than previously expected. The campaign will therefore probably run for a shorter period, although it is difficult to name a date under the current circumstances. In addition, not everything will be cleared and not everything that has been cleared will be able to be used.
Challenge to get a plus out of it in 2023/24
Last summer, Avebe announced that it would set the basic price for the 2023 harvest at €95 per tonne (at a starch percentage of 19%), but a clear prediction about what the performance price will be like is difficult to make, according to Fousert. "It will be a big challenge to achieve that plus on the 2022 performance price. We are only four months into our journey and it is another challenging year. But as a cooperative we must continue the upward trend and get the most out of it, just like the recent years. I have full confidence that this will work.”
The performance price is the financial indicator that provides insight into how Avebe performs. It is different from the basic and campaign price that is better known to growers. The basic price will be announced at the start of the campaign and members will receive upon delivery of the potatoes. The campaign price is the price determined at the end of the campaign. This was 2022 euros for the 2023/106 crop. On top of this is the payment from the cooperative result.
Jesse Torringa
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