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North-West Europe has large potato stocks
All recent stockpile inventories taken in the NEPG countries (North-Western European Potato Growers) have indicated that real potato stocks are higher compared to last season. They are also higher with regard to the five-year average. With 6% more acreage in the North-West and an 11% higher yield than last year, there are currently too many potatoes. This imbalance between supply and demand is having a negative impact on current free market prices. This is despite the processing industry showing a growth of 15% in production over the past five years.
Greater tare than expected
In December, the NEPG estimated an expected tare of 5%. This seemed realistic, if on the low side. Stores across the entire NEPG area keep reporting problems with quality. Although one variety is referred to most often, the other types are not entirely excluded. The supply still, however, exceeds demand. This is partly due to these low-quality products, which were not processed at an earlier stage, still being continually supplied.
In general, however, the quality of the stored potatoes appears to be good. This is, even though, some stores need to be opened earlier than planned, due to the problems with the potatoes' quality. This means that there will probably be a shortage of good frying potatoes at the end of the season. The cold weather in North-West Europe may also prove to be an additional challenge. Just as in years past, the question remains: when will the new planting season begin in the NEPG area? The (too) wet soil conditions, combined with the current frost period, means that an early start to the planting season is no longer feasible. The first early plantings in some areas in Germany have already been postponed.
The processing side's activities are good, but almost all the extra potatoes needed are supplied from contracted potatoes. This has resulted in the weekly demand for free potatoes being very low. Attractive prices for export potatoes mean exports of fresh potatoes from the NEPG countries are going well. Here, French exports are performing particularly well. The export of ready-to-eat potato products to distant destinations are also still showing a continual steady upward trend.
Lower contract prices for next season
Based on the current situation, lower contract prices for the processing products are expected for the coming season. This has now been confirmed by the NEPG. They have reported prices that are 5 - 10% lower, depending on delivery times, varieties, and the customer. These contract prices are not only lower than last season but are also lower than the one before. The very early segment will have the most significant drop in prices. According to the NEPG, these contract prices are not cost-effective for growers. They are advised to cultivate a realistic acreage of potatoes for consumption in the spring. This is in recognition of the continuing trend in Belgium and France. Here, less of the 'Bintje', and more of the processing varieties are being cultivated. These have a higher net yield. This could lead to an extra benefit on the average yields harvested.
Publication date: 2/28/2018
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