There are two views on the development of the free potato: a rather positive one and a downright negative one. The positive camp hopes that some of the storage problems will fall away, and that the market will get more breathing room thanks to increased consumption in processing and animal feed. Negative market experts expect that the volumes will continue to linger well into the coming season. According to Romain Cools from Belgapom, it is a fact that right now it is extremely quiet on the free market.
He continues: "It was an ideal growing season. This year Belgium held the worldwide record for the average yield per hectare, which according to some sources was 56 tons per hectare. You can see the development in the rise of contract farming. All in all, there is a quotation on the free market that we have never seen before. We are talking about 10 to 15 Euro per ton. It is a fact that the smaller this free market becomes through rising contract farming, the more volatility there will be in prices. The prices of contract farming are shown in the graph in the Belgapom listing, and this corrects the total image of the potato market.
Romain indicates that they are approaching a turning point. "Between Christmas and New Year's a lot of businesses are closed. Right now there is still some movement in export and industry. The last party, besides the expensive contracts, bought materials at an economical price which strengthened our competitive position this season with our North American colleagues. Just a few years ago this was reversed."
Positive or Negative?
According to Cools there are several factors that will determine how the rest of the season will go. The first is: will the increased processing actually be sold? Will markets be found? The answers to these questions, worldwide, remains to be seen. A second important aspect is that many parties may be set aside (culled) because of storage problems, as a result of the warmer weather during shed storage. Is there enough space to store the large volumes? According to optimists, this can have a positive effect on the market, but the pessimists expect that there will still be too much on the market. This could even have a negative impact on next season's early potato prices. We will know the truth in about 5/6 months."
He sees some possible bright areas in all this, "Hopefully, the industry will acquire some market shares relative to our biggest competitors, America and Canada. This just might be possible in some markets since the Euro has a more favourable rate than the dollar in these places. In terms of export markets, there is a chance in Africa, which may even be a determining factor."
Despite the low prices this season, Romain sees the sector not so negatively. "I noticed that people were optimistic during the 'Interpom Primeurs'. A lot of them had a number of good years. The market is where it is, and now we just have to try to get through it." All these market conditions together could lead to a complex change in acreage next season. "This year acreage increased by 3%, chances are that it will decrease in 2015. Imagine that you then have less yields, then it will be a completely new situation. The potato sector goes with the dance of the seasons."