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Will Potato Contract Prices be High Enough to Cover Growing Demand? 

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From energy and fertilizer to plant protection products, machinery, spare parts, land and construction prices, virtually all production costs continue to rise for potato growers in Europe, reported the North-Western European Potato Growers (NEPG) on January 28. The trade association added that the cost of renting a hectare (approximately 2.47 acres) of farm land has not only gone up, but “potato land” is sometimes impossible to find. Recent tightening of rental conditions in the Flanders region of Belgium could have an influence on developments in neighboring Wallonia and France. 

The last processor contract prices have just come out, and the numbers are overwhelmingly higher than the first published figures of late last year. Prices for delivery ex-field are generally up by 2.5 to 4 euros per 100 kg, depending on countries, processors and/or varieties. Some cover the much higher production costs growers are facing, others do not. Some processors, noting the reluctance of farmers to enter into new contracts, have modified their price tables to try to persuade more growers to sign on.

NEPG urges producers to conduct an accurate cost of production analysis before signing anything. Average production costs give an indication, but individual calculations are needed to make a decision. 

Contracts ‘Silent’ About Major Issues 

Contract conditions are more important than price tables, but these are usually absent or incomplete. Among major gaps in contract conditions include the fact that “force majeure,” burden and risk sharing (climate change consequences, loss of yet more plant protection products) between growers and processors and sustainable development all through the potato chain, are usually not addressed.

“With new EU regulations coming on greening agriculture (CAP reform), a lot of additional challenges are appearing, and potato producers think buyers and the society as a whole should also take on their responsibilities,” stated NEPG. “Besides growers, the rest of the potato value chain has to take up its responsibilities if they want a steady and big enough flow of potatoes…”

Different companies and processors have been and still are investing in either new or renovated processing infrastructures throughout the NEPG zone of Europe’s leading potato growing countries. These investments are showing that longterm development possibilities of finished products markets are unchanged. 

Over the last two decades, the development of the processing potato area has been driven by a growing demand for processed products. The next years could be a turning point, according to NEPG, which outlined key reasons: processors still want more potatoes, but growers no longer have the possibility to meet demand due to tight inventory of “potato land.” high production costs, decreasing yields caused by weather extremes. 

“Our ‘potato world’ is moving from a demand crisis to a supply crisis,” stated NEPG. “Will producers be as keen to produce potatoes in the coming years as they were five or ten years ago?”

Meanwhile, value added frozen potato products maker McCain Foods has reportedly inked a deal with the French group of potato producers for industry (Groupement d’agriculteurs producteurs de pommes de terre pour l’industrie, GAPPI) that will pay farmers an average increase of 20% in addition to a premium per ton for spuds delivered during the 2022-23 growing season.

In France, McCain Foods is supplied by approximately 800 farmers. It has been doing business with most of them for many years, and many of the growers are exclusive suppliers to McCain.