UPDATE FRESH POTATO SITUATION ON JULY 8th 2021

Lower total potato area in EU-04

The total potato area within the NEPG zone (EU-04) has been reduced by 4,7%. Potato area in EU-04 declines from 522.300 ha to 497.700 ha (-24.600 ha). There was a decrease in all countries, but most in Belgium and the Netherlands
who had the highest increases in area these last years, are also the only ones with a lower hectarage than the 5 year average (see chart)!
This is an historical event, because area has usually gone up year after year for the last 2 decades… Nonetheless, it is much more the production per ha than the potato area which will make the total 2021 harvest.
Second half of season 2020-2021 marked by some traders buying at higher prices than the Belgapom quotation
In some countries, mainly France and Belgium, growers remark that during the last 3 or 4 months some traders bought at higher prices than the Belgapom Friday quotation to then deliver processors who were not on the market.

Still a lot of unknowns

Be it the earlies or the maincrop, the list of unknowns is still considerable. Concerning the earlies, heavy rainfall the last weeks could impede a rapid enough build-up of dry mater in the tubers. This could lead to some delays in the delivery of contracts.
And give some air to the last old potatoes from crop 2020.
In all countries potato plants have developed a lot of leaves, but tubers are much smaller than on average. “A lot of haulm, no tubers” is a remark often heard. Tuberization in maincrop varieties seems higher than what was the case the last 3 or 4 years.
A high tuber count is usually a promise of a potential good harvest, but of course one needs enough water in August and September to fill and fatten all the tubers. Should we get a heat wave and/or a drought, maincrop varieties could be affected
much more quickly than was the case the last years, because plants did not make a lot of roots.
The Covid-19 situation, though developing more or less favourably, could still lead to different types of restrictions and thus slow down the demand in frozen chips and other potato products.

Higher production costs and new challenges

Production costs for the 2021-2022 season are already building up: higher costs for blight (and other!) sprays, higher energy prices (diesel and electricity), higher prices for fertilizers (liquid nitrogen saw its price double in a few months).
Not to mention everything which has to do with building: insulation material, concrete, steel and wood have also dramatically increased.
Growers are very much aware of new challenges too: more sustainable and robust varieties are needed, be it with more blight resistance, and higher drought and heat tolerances. Varieties which need less fertilizers and are more N-efficient are also needed!

EU-04 CONSUMPTION POTATOES (excl. Seed and Starch potatoes) on 8-7-2021

YEAR201620172018201920202021today vs5-yeartoday vs
last yearaverage5-yr avrge
Countries in NEPG
Acreage 5-yrs average494 052494 052494 052494 052494 052494 068
Annual variation5,50%6,50%2,20%4,20%2,30%-5,00%
Total surface454 438483 766494 538515 531521 985497 683-4,70%494 0521,00%
Belgium91 36895 34694 42897 92196 98589 053-8,20%95 210-6,00%
Germany164 500174 400178 500186 000189 700183 060-3,50%178 6202,00%
France125 250137 720145 260152 720158 590153 840-3,00%143 9087,00%
Netherlands73 32076 30076 35078 89076 71071 730-6,50%76 314-6,00%
Source : North-western European Potato Growers (NEPG)

UPDATE FRESH POTATO SEASON 2021/22

With a few more weeks to go in the old season 2020/21, a lot of attention is being paid to the size of the season 2021/22.
Not only had farmers’ associations called for a considerably lower acreage of potatoes, but also for a fundamental review of exploitation costs of growing, harvesting and
warehousing fresh potatoes for the processing industries (frozen and dehydrated).
In reality only 3-5% less surface had been planted (mainly early varieties), according to NEPG (North-Western European Potato Growers).
It shows once again how difficult it is for farmers to reach an agreement on border crossing sectorial level.

Weather conditions during the planting time was not particularly favorable : there was late frost and the soil was too cold, so that within the first 2-3 weeks after being put into the ground,
the seeding potatoes did not show any sign of new life.
The entire month of May, though, has given soft rainfall almost every day and a warmer period is announced for the first half of June. This is ideal weather for the potato
to further sprout, grow and develop nice and a healthy leaf structure and finally formation of tubers.

Potato processing industries have had to pay a bit more for long term contracts with farmers. Together with sharply increased cost prices for poly-ethylene packing materials,
paper for carton boxes and wood for pallets, it will undoubtfully lead to increased prices on relatively short term. How pricing will be on 12- or 6-months’ basis is still a bit
too early to predict and directly linked to how the plant will further develop during the month of June.

Further studies and test cases will have to be made in order to better monitor the warehousing of ware potatoes in September and October, without the traditional
anti-sprouting products. The passed season has given proof of the fact that this matter still requires serious improvement.
Facing climatic challenges, such as dry and hot summers, is another aspect that could have an impact on cost pricing. The past 3-4 summers have shown how big the impact
of lack of water during the critical months of June/July can be on the total output and the spot market prices. Irrigation is the word, but in 2021 this process has become
very costly, so that both farmers and processing industries must take it into account when studying cost prices.

UPDATED SITUATION FRESH POTATOES

As informed in previous news flash, this is the first season (harvest season 2020/21) in which the use of CIPC derivated sprout inhibitors is strictly forbidden by the EU.
Some 3 months after the first intake of freshly harvested potato tubers, there are clear indications that the alternative sprout inhibitors are not as efficient as the products containing CIPC.

Already at this moment farmers in Belgium, the Netherlands and France are reporting sprouting activity on the tubers in their air conditioned stores.
Bearing in mind that neither the fresh market, nor the processing industry can make use of potato tubers showing sprouts, there is a good deal of likelihood that the entire industry
will be facing another nightmare in the following weeks and months. Especially once winter is over and the outside temperature starts climbing up again, there will be no possibility to
stop tubers from sprouting and start a self-deterioration process.

When taking possible losses of volumes of available fresh potatoes into account on top of the fact that farmers are expected to plant some 15% less acreage in the new season 2021/22, we
would not be surprised if March/April brings a complete turnaround in today’s situation of potato products. We recommend our customers to remain extremely vigilant.
Last but not least the ocean freight has become very unstable on all lines due to reduced amounts of empty containers resulting in sharply increased seafreights.
As 1+1+1 = 3, we do not exclude sudden price increases in springtime 2021.

UPDATE FRESH POTATO SITUATION ON NOVEMBER 3rd

The NEPG (North-Western European Potato Growers) estimates that the total harvest will be 27.9 million tons this season if all potatoes in the ground will be indeed harvested.
The harvest is later than usual with all the risks involved and there are still some potatoes in challenging wet areas in Western Belgium and Great Britain. This is 4,5 % or 1 million tons more than last season in the 5 leading potato countries.
The NEPG considers that the growers in the North-Western EU will plant totally 15 % less next spring.

Due to Covid-19 the worldwide demand for processed potato products decreased enormously and the actual demand for raw material from the factories is about 85 % compared to last season, before the pandemic. The actual low free-buy price level for processing potatoes is emphasizing this.

Volume reduction of the contracts

European and Northern American potato processors have large stocks of ready products in their cold-stores and need less raw material for a longer period. It is expected that they will reduce their next year’s contracts in volume with the growers and have hardly interest in free potatoes.

Due to the actual cost of growing and storing potatoes a reduction of the contract prices is not expected. Over the last 5 years, the NEPG growers increased their consumption potato area by 7.7 %.

The increase in France was almost 14 % and Germany 10 %, however, also the other countries increased their area. This increased area is an enormous contrast compared to the slower growth of the demand for raw material by the factories, and reduction since the Covid-19 situation.

With the upcoming second lockdowns in several countries, the NEPG expects no changes over the upcoming season. On top of this also the result of the Brexit discussions could influence the market.

Transition season

Due to new regulations for storage (ban of CIPC, introduction, and use of ‘new’ sprout control products), especially the longer storage this upcoming season can be considered as challenging, a transition year.

The availability of some new anti-sprouting materials is lower than what growers need, and their use is more expensive and more difficult (adapted warehouses, gasing equipment,…) technically than with CIPC.

The NEPG expects that fewer growers will go for the extreme long storage and it is strongly advised to re-calculate the cost-price before signing any contract.