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NEPG reports lower processing contract prices and higher production costs for growers

According to the North-Western Potato Growers (NEPG), processing contract prices for the coming season have been published in recent weeks. The industry body says in a press release that contract prices for delivery ex-field in October-November are generally lower than last season – between 5 and 10% . At the end of the season (May-June 2022), the decline is less, and in most cases prices are slightly higher than those for the 2020-2021 season.

Some processors have offered contracts at a lower tonnage per ha than last year, but it is very difficult to know whether the total volumes contracted are lower or equivalent to those signed last winter. Some processors are offering increased areas compared to the 2020-2021 season.

In some cases seed prices linked to a contract are lower than last year. In many cases, multi-year contracts have been proposed to growers. Some growers are still hesitating to sign contracts, because price offers sometimes do not match up with higher production costs, be it in field or in storage.

Higher production costs

Current prices seem less profitable for growers than those for the past seasons. In some countries it seems not that much of a major problem. In general, growers have experienced higher production costs during the last growing season (more use of maleic hydrazid, higher costs for haulm killing, cleaning of storages, investments in renovating and better insulation in storages for fogging, additional costs for purchasing and application of the new anti-sprouting compounds) and much higher costs during this first storing year due to the more expensive (products and application), less efficient and earlier and more active sprouting of potatoes (due to last summer’s weather).

Even though most contracts for the upcoming season have already been signed, NEPG urges growers to make accurate production costs analysis prior to signing anything. This can give them more leverage for eventual late signing of (additional) contracts.

Financial problems for some growers

With the sometimes very much higher and additional costs farmers have had to bear during the last months and also related to low yields, some of them are in critical financial problems. Some growers have asked to delay payments of renting land outside their farms or for paying the seed for the coming season … Others have gone to see their banker to try to get new loans…

New processing factories and investments in current ones

Different companies and processors have been and still are investing in either new or renovated processing infrastructures throughout the NEPG zone. The industry clearly needs more processing capacity and… potatoes.

Evolution of the free market since beginning of the year

Since Christmas, free buy prices have tripled and are still going up with a demand which is higher than the offer. Some farmers (who need to complete contracts which they can’t fill), traders who need to comply their obligations vis-à-vis the processors, and to a lesser extent processors themselves are buying on the same market.  During the last weeks, traders and/or processors have also been buying at quite much higher prices for delivery March to June, creating a kind of double market, the latter being much less visible than the first one for immediate delivery.

The following organisations are active members of the NEPG (in alphabetical order): ABS (B), FIWAP (B), FWA (B), PCA (B), REKA (D), UNPT (F) and VTA (NL).

Source: North-Western European Potato Growers (NEPG)

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