Opinions Potatoes
The potato grower himself is his own worst enemy
Pricing in the agricultural sector has always been somewhat peculiar. John F. Kennedy said it 66 years ago: "The farmer is the only one in our economy who buys everything at inflated prices at retail, sells everything at reduced prices at wholesale, and pays the transportation costs both ways." However, the potato market's current state of affairs is quite unusual. Although the 2025 harvest isn't even fully in yet, growers are already anticipating what they can expect from the contract price for the coming harvest next winter. Whether it's very helpful to make sweeping pronouncements is another matter.
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Jurphaas Lugtenburg
The French fry potato market has gone from the €35 bid in January to a situation where you'd be lucky if they even took the tons above the contract price for €1,50. Whichever way you look at it, this has severely damaged the confidence of the average potato grower. It wasn't just growers who hadn't anticipated this. For many processors, last winter's forecast of the amount of potatoes they expected to need this season can be thrown into the wastepaper basket.
It's taking some getting used to that, after two years of processors collecting anything that even resembled a potato, we're now in a situation where every little detail is being skewed. Just as the moderate farm gate prices in 2024 dampened growers' expectations for contract prices for the 2025 harvest, this season seems ten times worse.
Stronger together?
As a potato sector (growers, traders, and processors) working together to balance supply and demand by, among other things, managing the area – as the NEPG recently suggested – seems like a logical step to keep the market healthy for all parties. Whether that will succeed, however, is another matter. As mentioned, a year ago, the industry wouldn't have anticipated the oversupply we've been experiencing for months now.
Perhaps even more remarkable is the attitude of growers. A year ago at Interpom, many growers remarked: the contract price will undoubtedly decrease. Processors are keeping their cards close to their chest, but between the lines, some hinted that if growers had been a bit more resolute, there might have been a bigger upside. Now that there is no demand for (free) potatoes this season, at least in the harvest season, various growers are predicting by how much they expect the contract price for the 2026 harvest to drop.
You ask...
You don't need a degree to understand that processors, under the guise of "you ask, we deliver," will be happy to lower their contract price. Regardless of whether the margins—both for the processors and the growers—just make it necessary.
In defense of the growers, it should be noted that, partly due to the very moderate wheat price, there are few profitable alternatives to potato cultivation. Despite the fact that wheat has been written off several times, the crop continues to play a pivotal role. That the handbrake is now being pulled after several years of unbridled growth in potato acreage, and that price is one of the levers to be adjusted, is not illogical. Speculating so openly about how much the contract price will drop, on the other hand, is less logical. The desire to continue planting, despite the potential for little profit, apparently runs deep among some growers.
To return to Kennedy's quote and give it a slight twist: few entrepreneurs put such pressure on their sales price beforehand. Perhaps we, as growers, should also keep our cards close to our chest.