Further segmentation on potato market

Barcelona, Toronto, Paris; not just three random cities. They’re the names of potato varieties of The Potato Company from Emmeloord, the Netherlands. The relatively young company names the varieties for cities that fit their characteristics. It also shows the international character of the seed potato supplier. Gaby Stet, general manager, sees the market becoming even more international, and responds to that with new varieties.

“We’re seeing a further globalisation of the potato production,” Gaby signals a trend. “The quality of table potatoes from abroad is increasingly improving.” France, the UK, Israel, North African and Southern European countries are examples of countries where the potato production is getting larger and larger. This is a chance to grow for seed potato traders, but it means more competition in the consumption potato trade.

One example is Senegal. The West African country was a major market for consumption potatoes in the past. “Now they have their own production and good storage,” Gaby says. “They’ve been working on that for ten years, but they’ve now reached a point that borders are closed to potatoes when the local harvest is available.” Senegal is self-supporting for about four or five months of the year. Just as with onions, the market is closed for import during those months.

Globally, the number of markets for seed potatoes is growing, and licensed productions are also increasing. Although Eastern Africa is a poor region, and only small volumes of seed potatoes are sent to that market, it is a market showing development. The Asian market, and particularly China, is also an interesting target audience. “There’s a risk for copying behaviour of varieties, so that we’re a bit more reserved when it comes to Asia,” Gaby explains.

Since the boycott in August 2014, Russia has been investing in self-sufficiency. Although consumption potatoes are stopped at the border, seed potatoes have access to the Russian market. However, this trade isn’t without its risks. “As a consequence of the MH17 disaster, it’s become more difficult to do business in Russia,” Gaby says. “For example, it isn’t possible to register new varieties.” This registration of varieties is important for trade in the long term. Besides, Russia is likely to devote themselves to becoming self-supporting regarding seed potatoes, which can also be seen in other countries. “Egypt has large projects to set up their own seed potato production. In the past, these projects often failed, but the trend for self-sufficiency is continuing everywhere.”

Although the Dutch seed potato production is still a frontrunner regarding quality, the rising cost price for growers could result in problems. In the past 15 years, land prices have tripled in the Noordoostpolder, for instance. Besides, oil prices are increasing, so that costs for growers are also increasing. One of the ways to absorb that increase in cost price, without customers ending up paying for it, is to increase yield.

The Potato Company is a relatively young company. Since being founded in 2004, ten new varieties from their own research have been marketed. For the development of these new varieties, disease pressure plays an important part. The company’s focus is on varieties that solve production problems. “We have developed varieties that are resistant to phytophthora,” Gaby says. With these varieties, the nematodes are decreased by 90 per cent each year, until the problem has been solved.

Phytophthora appears to have been contained due to new resistant varieties that can also be used in organic production. “However, the disease mutates, so varieties that are resistant today, might not be tomorrow,” Gaby notes. The search for a resistant variety for this disease is therefore still going on.

The changing climate is another reason for research into new varieties. “They say Emmeloord might have the Bordeaux climate in 15 to 20 years, that will cause a change in production,” Gabby describes one scenario. This climate change means a declining trend for traditional varieties such as Bintje or Biltstar. Varieties now grown in the south of Europe, could then also be planted in the Netherlands.

For trade, it’s an important question for the future if and when genetically modified crops will be allowed in Europe. “That technique is now being developed,” Gaby says. Crispr-Cas is one of the methods now being researched. For that method, genes are taken from a crop to improve that same crop. For the development of a new potato variety, only potato genes would therefore be used. “The acceptance rate of that technique is higher than of other techniques.”

For now, however, only the traditional improvement technique is allowed, which means new varieties are created by cross-fertilising. “This requires a lot of work and time,” Gaby says. In the Netherlands and Europe, moods regarding genetic modification are primarily negative. It’s therefore unlikely this will change in the short term. Yet it will have consequences, Gaby expects, and give more power to large companies that have plenty of budget to set up large laboratories, for example.

In the short term, potato seed isn’t a major threat to seed potatoes, according to Gaby. “Seed potatoes have 100 per cent homogeneity in production. With potatoes from seed it’s quite something to get just 90 per cent. This means one in ten tubers is different. With seeds, you’ll have to wait and see.” Due to this limited homogeneity of potatoes grown from seed, these are less appealing for the processing industry, for example. “For a lot of countries near the equator that are difficult to reach with seed potatoes, seed could be a solution,” Gaby continues. In these countries, focus is mostly on plenty of food production, and potato seeds could be a solution to that.

In the long term, Gaby expects a further segmentation to become visible on the market. “It can already be seen in the various colours of crisps, or in demand for a round or oval potato. This segmentation will just continue.” Gaby also expects requirements from processing industry will become more specific, and more special varieties will be asked for. “There’s more demand for niche and specialities, and we’re good at that.”

What about the names of the varieties? Gaby: “Some variety names sound very nice in Dutch, but are unpronounceable for people abroad. Cities are known all over the world, and names are catchier.” The French city of Bergerac, in the truffle region, is the name of a purple variety. Toronto, capital of chips, gave its name to a chips variety. The wine-red variety has the appropriate name of Bordeaux.

The Potato Company (TPC)

Gaby Stet