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Lower contract prices and higher production costs for potato growers in the Netherlands, Belgium, Germany and France

The development of contract prices is not being consistent with the development of production costs.

2/19/2021

Potatoes.

The contract prices of the potato processing industry for the next season in Holland, Belgium, Germany and France have been published in recent weeks. Offshore and October / November delivery prices are generally 5-10% lower than last season. For long-term storage (May-June 2022) the decrease is less, in most cases the contract prices for that period are slightly higher than those for the 2020-2021 season.

Several processors have offered contracts with a tonnage per hectare lower than last year, but it is very difficult to determine if the total volumes contracted are less than or equal to last season. Some processors offer a contract for a larger area compared to the 2020-2021 season. Furthermore, in some cases the prices of the seed potatoes linked to the contract are lower than last year. And it often happens that multi-year contracts are proposed to producers.

There are reports from several countries that producers are still reluctant to sign contracts, because the contract prices offered do not compensate for their higher production costs.

Higher crop and storage costs

Higher cultivation costs during the last growing season are the result of more MD use, higher costs for irrigation, slaughter and crop protection, while mechanization costs also increase to get the product out of the ground correctly. For storage there is an increase in costs due to the cleaning of the storage sheds and the investments in renovation and better insulation for the use of fogging. Furthermore, the purchase and application costs of the new outbreak inhibitors are much higher, while the effect is less effective. Due to the weather conditions of the season, there are more problems with stored germs. This differs by country.

Although most of the contracts for the next season have already been signed, NEPG urges growers to carry out a proper analysis of production costs before signing anything. Waiting to sign can be an option to strengthen the position.

Financial problems for some producers

The combination of sometimes much higher (and additional) costs that producers have had to incur in recent months and low yields, in several cases, leads to critical financial problems. There are reports of a deferral of the payment of rent for land and potato seeds, so suppliers or banks are asked to obtain additional credit.

Processing Industry Investments

Several companies in the processing industry throughout the Netherlands, Belgium, Germany and France Potato Producers Group (NEPG) area have invested in new or existing production lines (Dunkerque, Poperinghe, Peronnes, Lelystad). The industry clearly needs more processing capacity and therefore more potatoes.


 
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