Which arable crops are attractive in 2019?

The construction plan of arable farmers in Europe is partly fixed. Rapeseed, barley and wheat have largely or even completely been sown for the 2019 harvest. Due to a turnaround, especially in the grain and sugar market, it is extremely difficult to make a correct estimate for next year. A higher price level for wheat than in recent years makes it attractive to return to a more extensive cultivation plan. Especially for large grain countries such as France, Germany, the United Kingdom and Poland.

potato area
The high free market price for consumption potatoes also makes it attractive to expand in this area. However, that is not easy. First of all by one expected shortage of seed potatoes. The exact consequences are difficult to estimate. Early cultivation in particular is affected by shortages, but the main harvest is also expected to make do with less. Have growers been able to anticipate this situation by focusing on farm saved seed (FSS)? Seed potato trading companies notice that such years always result in a significant increase in non-certified seed potatoes.

Anyone who has good quality free potatoes in the shed has a bright future. That is not the case everywhere. In the Netherlands, but also Belgium and France, the cards are shuffled differently. Those who grow potatoes on a fixed price contract are having their third bad year in a row. In 2016 the yield was missing, and in some cases the loss had to be transferred to the 2017 harvest. What followed was an unprecedentedly high kilo yield, with the excess kilos barely being paid. This year, once again, it is not possible to benefit from the high price level. There is no question of excess kilos.

The Belgian farmers union calculates an average lower yield of 32% for ware potatoes. About 60% of the Belgian acreage is grown under a fixed price contract, it tells the news site Felt. The remaining 40% is traded on the open market.

Potato processors in the EU-5 most likely have the ambition to further strengthen their grip on cultivation. Read: more contracts. A plus in the contract price should achieve this. However, alternatives to the fixed price contract are being looked at more often. For example, a click contract or a mix of both, supplemented with a pool. Such instruments help the grower to change tack. In the growth regions for consumption potatoes (southeastern and northeastern Netherlands, Wallonia and northern France), arable farmers have focused their business operations on potatoes. Substantial investments have been made in technology and storage. Such companies will not be sowing grain any time soon.

Sugar beet area
The crux lies with the 'conservative' and extensive arable farmers in Europe. Companies with a lot of grain, rapeseed and sugar beets. The latter crop has experienced a significant price drop. Sugar has not been this cheap on the world market in 10 years. The expectation is that this will continue for a longer period, despite that message about rising prices. Rising oil prices mean more sugar processing into biofuel (ethanol). Due to the low European harvest, stocks in the EU are low. A surplus can quickly turn into a shortage, as we have seen happen on the grain market. Will European arable farmers sow more grain and less sugar beet in 2019? Or would they rather rent out land for potatoes?

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These are questions that arable farmers struggle with. In the United Kingdom, growers receive their contracts for 2019 presented. Despite more attractive conditions, the basic price drops to €21 per tonne of beets. There is no longer a discount for head tare and at a sugar price of €375, growers receive 15% of this increase on top of their contract price. Initial estimates in the British agricultural press show that arable farmers are not easily persuaded. The lack of neonicotinoids in the seed coating makes cultivation more difficult throughout Europe. The British are fed up with late harvesting, until early March, and problems with processing and logistics. Their cost price is €25 to €28 per tonne.

However, beet cultivation is also a 'break crop' for farmers. Rapeseed is hardly an alternative. The neonicotinoid deficiency causes crops to be affected by insect pests. The dry autumn is taking its toll in Central Europe, resulting in poor crop conditions. Spring grains are the best alternative, but the yield of spring wheat or barley hardly differs from that of beets. The advantages lie in better soil condition and possibilities for sowing green manures.

Tense situation
The situation is different in, for example, Germany and Poland, but also Belgium. There has been a conflict between farmer and processor for some time now. Sudzücker Polska is at odds with arable farmers. Further shrinking margins do not help here. In France, processors are calling for fewer beets to be grown. Meanwhile, factories compete with each other. Grain maize is an alternative to beets in these countries because it also concerns spring sowing and a harvest in late autumn. That fits in with the labor planning.

It remains to be seen what the areas will do in 2019. Analysts agree that more wheat is likely to be sown in Europe. However, the dry autumn has an impact on the initial development, which affects the number of hectares. If we compare potato cultivation with that of wheat, a pattern becomes visible. When the wheat price fell in 2013, the potato area actually increased. However, there are several reasons for this, although the yield of grain certainly plays a role.

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Role of processors
Growing more potatoes is only possible when there is demand. That factor has been playing an important role for 10 years. Perhaps even more important than the wheat price. However, a clear picture is not immediately visible between processing and cultivation. If we look at the trend line, it is clearly rising. Even in years with a small area, many potatoes are processed. Since 2014, European processors have been able to significantly expand their position thanks to an increasing volume of potatoes.

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Conclusion

• The area of ​​grain (wheat) in the EU will most likely increase in 2019.
• The area of ​​sugar beet is decreasing in the EU sugar-producing countries.
• There are growth opportunities for potato cultivation in the EU-5 + Poland.
• The seed potato supply for the main harvest is still too unclear.
• The area of ​​ware potatoes may decrease or increase by a few percent.

The price of wheat may be €30-50 higher per ton compared to the previous 3 years, but that is not yet a game changer. Large companies use the market and sell ahead of the (future) market. Confidence in sugar beet cultivation in Europe will continue to decline in the short term. Potato growers who have recently invested heavily are holding on to their acreage or taking advantage of opportunities to further expand it.