The 2014/2015 potato season starts dramatically for the grower. With a selling price for free market chipping potatoes covering only about 10% of the cost price, it's hardly justifiable to harvest the potatoes. But there is also hardly any return noticeable for processors in such a market either. Dutch agriculture union NAV has been advocating supply management as an instrument to try to prevent such dramas for years.
Last year, the start of the chipping potato season was marked by short supplies, and hence good prices for the free market potatoes. So it's logical that more early potatoes were planted in 2014. Because of the early spring, those potatoes could actually be planted in time. Circumstances for growth were great, so there was more than enough supply on time. The industry has done a lot of contracting. The current situation, with such high supplies, is that there's hardly any demand for the potatoes in the free market. And with that, the price has gone down to a low point of 1.50 Euro per 100 kilos.
This start of the season doesn't give a lot of hope for returns on the main crop. The individual grower doesn't have any opportunities for influencing the market. The only thing left for him to do is consider whether it's worth it to dig up the potatoes. Together, the growers in Northwest Europe can influence the market by not selling a portion, for instance 15%. However, there's little chance of them being able to do this within 4 weeks. From experience, the NAV knows that this step is very difficult for farmers.
Something that might offer better chances, is for growers in Northwest Europe to use the coming months to agree on planting 15% fewer potatoes next year. Because the current acreage is really too big, according to the union. With an average yield, 25.5 million tonnes is produced, and the NAV concludes from an analysis of the market that the tipping point is at a production of 22 million tonnes. To have a better chance of higher returns next year, reducing the acreage is necessary. For this, growers will have to be able to make such agreements. Organizations of producers, for which there's a lot of attention in the new GLB, could be a suitable tool for this.
Something that might offer better chances, is for growers in Northwest Europe to use the coming months to agree on planting 15% fewer potatoes next year. Because the current acreage is really too big, according to the union. With an average yield, 25.5 million tonnes is produced, and the NAV concludes from an analysis of the market that the tipping point is at a production of 22 million tonnes. To have a better chance of higher returns next year, reducing the acreage is necessary. For this, growers will have to be able to make such agreements. Organizations of producers, for which there's a lot of attention in the new GLB, could be a suitable tool for this.
The agriculture unions have collectively called upon Dutch and European authorities to give organizations of producers as many possibilities as possible, so they can actually control supplies. It can be seen as a form of crisis management. Based on the developments in the onion, grain and sugar markets, it looks to be a very tough year for crop farmers. The legislator will have to create the opportunity, but the growers themselves will also have to take steps to join forces and operate in the market collectively.
Source: NAV