CONTRACT LEVELS FOR THE MOST FAVOURITE PROCESSING VARIETIES HAVE INCREASED BY 70 TO 80% OVER A FIVE YEAR PERIOD. IN A BID TO OUT-COMPETE EACH OTHER, AND ENTHUSE GROWERS, PROCESSORS HAVE STEADILY UPPED THEIR OFFERS TO TIE UP GROWERS.
HARVEST NOT FINISHED Farmers in the other three countries, as well as the UK and Poland, had a slightly easier spring although big differences can be found regionally. Final yields have yet to be confirmed, as potato harvesters will be working their way through the remaining 20% of the potato area during most of November. Luckily, autumn conditions have been kinder this year compared to last year, but some farmers in France and Belgium are still struggling to get their crops lifted and stored.
POTATO AREA TO RECORD LEVEL It is mainly thanks to the monstrous growth of the potato area in the EU-4 that the total yield can top that of last year. No less than 57,680 hectares (142,527 acres) of extra potatoes were planted this spring. This brings the EU-4 ware potato area to a record of 576,550 hectares (1,424,655 acres). A 12% increase YoY. With cereal and oil seed rape prices back to pre Ukraine war levels, potatoes provide a big attraction to growers that seek to confront ever tighter on-farm margins and profitability levels. Contract levels for the most favourite processing varieties have increased by 70 to 80% over a five year period. In a bid to out-compete each other, and enthuse growers, processors have steadily upped their offers to tie up growers. The ‘free market’ for potatoes took the collateral damage as farmers have signed up more potato volume than ever, seeking ‘paper security’ in a cost-increasing world.
NEW FACTORIES HAVE BEEN BUILD AND EXISTING FACILITIES STREAMLINED, BUT WILL IT BE ENOUGH?
RECORD VOLUME Despite a growing season with pitfalls – mainly late planting dates and a high disease pressure – the record potato area makes a bumper crop possible. According to our latest estimates the total crop in the EU-4 will reach a level of 24 to 24.5 million tonnes, which is 1.89 million tonnes over last year and nearly 10% above the five year average. It is also significantly higher than the previous record of 23.5 million tonnes harvested in 2017. Seven years ago this resulted in low prices and a negative market sentiment. It is unlikely that season 2024-2025 will be a repeat. This is reflected in the EEX potato futures, which stays strongly around the €30 per 100 kg level for April delivery. This is a far cry from current spot prices however, that are less than half of this amount in most European countries. Only time will tell if European processors have bitten off more than they can chew, or if they are capable of processing 24 million tonnes and over in the coming ten months. New factories have been build and existing facilities streamlined, but will it be enough?
5 | ADMISI - The Ghost In The Machine | Q4 Edition 2024
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