What does a special season do with DCA's price forecast?

"To be able to estimate what the future will bring, it is important to look back," says Kees Maas, director of DCA Group, during the closing broadcast of the Potatoes Crop Tour. The 2019/2020 season is characterized by the corona crisis. In March, when the lockdown was implemented, the potato market completely collapsed. The closure of catering establishments, among other things, caused an unprecedented drop in demand. Factories were shut down, leading to a potato surplus of 1 million tons. The big question was: how do we get rid of all those potatoes?

"It may be crazy to say, but the corona crisis actually came 6 weeks too late." Maas is referring to the fact that we were in the middle of the contracting season for the 2020/2021 season. "The contracts were 90% signed. It was difficult to respond to the drop in demand," he explains. It made for a false start to the season. "Old potatoes were processed up to and including week 34. In my opinion, that was not a good choice, because the demand from the forage trade and fermentation was greater than expected. As a result, the tons were disposed of fairly easily. If we had done that earlier, we would have can start the season with a clean market."

Growing season also extreme
The growing season itself also had plenty of challenges. "The structure of the soil was poor. It seems as if there are no winters in the Netherlands anymore and that causes a delay in the development of the crops." The result is a lower number. "Although Innovators are already sensitive to this, we also saw this with Fontane and other varieties the tuber development this season was relatively low." In week 25, the number of tubers on the Gewastour plots in Cuijk and Dronten was 9, while last season it was 11.

On balance, there was no ideal starting position. "You also saw this on the potato futures market, because it started to rise to €12. This despite the negative sentiment of all those old potatoes in the market," says Maas. Subsequently, the month of June was very dry, the month of July was wet and the month of August can be described as changeable. "However, due to the late emergence, the crops were still vital in August. As a result, a significant part of the growth lag has been made up. This shows that as a farmer you have to fight against and at the same time collaborate with nature every season. "

The dry spring, the cloddy soil structure and the moderate emergence did provide some hope. From week 7 to 8, the market completely collapsed due to corona, but the price for new potatoes remained stuck at around €13 to €14. "Potatoes don't grow under one roof and so anything can happen. The good news was that the market for new potatoes has remained above the magical limit of €10."

Development of area
In the period after the lockdown, attempts were made to reduce the area slightly, but in vain. According to the analyst, whether growers will have to downsize on their own next season is something that every individual must think about for themselves. "The market has become unbalanced due to corona. If chip factories only need 90% next year, a reduction of 10% to 15% in the area is necessary. Growers must ask themselves whether they want to grow for a market that is not there "About 20% of the problems cost 80% of your time. It might be better to get rid of that 20%: think of plots that always perform less well or for which you have to drive far."

The expectation from DCA is that the EU-5 will have an area that is the same or slightly more than last season: namely 27,4 million tons. "This is 100.000 tons more than in 2019. France and Belgium in particular are showing growth." It looks like Germany, England and the Netherlands will be above the 5-year average, but France and Belgium will be below it. "The average yield over the past 10 years is 44,2 tons per hectare. However, a comment must be made about these figures. The year 2018 is also included and significantly reduces the average. We do not include that season. , then the average is above 45 tons per hectare and the yield is therefore below average today."

The price forecast
If we look at the potato futures market, it is currently trading around €6 to €7 per 100 kilos. The trend of this season is the same as the years 2004, 2011 and 2014. "If there are no special movements in the market and processors do not go to 105%, the expectation is that we will end up with a price range between €3 and €6 per 100 kilo. There will still be some light in the tunnel towards the end of the season," Maas explains.

Yet Maas agrees that the market has been and will remain scarred by corona. "Without corona, we would probably have seen a market of €15 to €20, but that is a 'what-if situation'. The recovery of the chip market will therefore be decisive." Maas expects that we will feel after-effects for at least 2 to 3 years. "Everyone was focused on growth. Now we have to look for a different strategy. The area must and will shrink, contract prices are lower and the industries are going to take a critical look at who and how much they contract. In the coming years, the girls will again be boys separated."

Opportunities
This does not mean that there are no opportunities in the market. "For example, demand has arisen for table potatoes. As a grower you can check whether the soil is suitable for this. Another option is to store them for a long time." The Agria market also offers opportunities. "This has become a niche market. The returns were not fantastic there either, but there was enough demand from retail." And when asked whether a market above €25 will ever be possible again, Maas is clear. "Absolutely. I don't know when, but that opportunity will certainly come again."