The year 2023 will enter the history books in (Western) Europe as a year of extreme irregularity in agricultural activities. Several external factors played a very important role in the fluctuations of market circumstances of which we give a short summary :
- As a result of the situation in Ukraine, availability of wheat, barley and corn became limited in the EU and mills offered attractive prices to European farmers to sow cereals, which suddenly became an interesting alternative to growing potatoes with its riskful context of diseases, conservation, antisprout measures, etc…. Potato processing industries had to review their buying policies and offer as much as 40-45% more for their raw materials in order to make sure farmers would grow enough volumes for non-stop processing during the year
- Springtime was too cold and too wet, leading to farmers inability to enter and prepare the fields for sowing and planting
- Summertime was hot and dry, leading to serious doubts about how the crops
would grow and develop. Expectations of a serious general fallback in volumes were justified - Availability of irrigation waters became a bottleneck, as authorities put a ban on the use of navigable waters (canals and rivers)
- September was as good as perfect, so that hope came back for farmers and industrial processors and price expectations became again more moderate, in spite of high costs of imported energy and raw materials (see further)
- As a result of late sowing and planting, farmers planned to let plants grow till full maturity in order to have the best output, a higher yield per hectare and a maximum of large size potatoes ; where under normal circumstances the harvest is over by end of October, this year it had only just begun
- November gave rainfall in quantities equal to 3-4 months, resulting in many fields being flooded or at least too wet for harvesting equipment to enter
- In the first days of December night and day frost showed up nearly everywhere, leaving some 1,4 million tons of fresh potatoes still in the ground, affected by water and frost. In other words a majority of that large quantity (nearly 20% of the total output) will be considered as completely lost for processing or consumption
The above circumstances lead to present situation with a 100% certainty about shortages of quality fresh potatoes in Q2 of 2024. Contracted volumes cannot be honoured by farmers + the spot market is too small to cover the missing volumes at sky high prices. It is clear that the European potato processing industry will run short of raw materials and will have to import potatoes in order to avoid complete stand still of operations in May and June 2024.
Meanwhile potential alternative supplying countries (USA, Canada, India, China) put their nose against the window, but past harvest in USA and Canada was too weak so that only alternative sources from India and China could be tested, with variable results and level of satisfaction.
With India facing the start of a new season at the end of this month, the demand there will be much stronger than one year ago. It will result in market prices becoming firmer and perhaps some companies with lower experience and reputation on the international markets will not honour earlier made commitments, when they find out they can obtain better prices on spot markets, when customers are being let down by European suppliers.
As long term supplier of premium quality potato flakes of European and Indian origin we recommend all our customers to carefully budget their requirements for the entire year 2024 and to cover (at least a major) part of it via long term contracts with a reliable supplier.
The Gedimex team remains at your entire disposal for any further information you might require. Upon your request we will submit you offers for supplies on 3-, 6- or 12-months basis at fixed terms.
Meanwhile we take advantage of wishing you a fine and peaceful end of the year and look forward to working with you in the New Year !
The Gedimex Management