The Mintec Benchmark Prices of processing potatoes in Belgium rose by 11% in the two weeks up to 20th April 2022, and up 264% year-on-year (y-o-y), according to a report by Alice Witchalls for Mintec. This is largely attributed to rising costs of inputs combined with firm demand for processing potatoes.
According to Witchalls, this rise follows a slight decline in prices in mid-March amid fears of trade disruption due to the Russia-Ukraine geopolitical conflict. The uncertainty led to many processers withdrawing from the free-buy market and relying on contracted supplies, yet, prices still remained well above 2021 levels.
Looking forward, there is a lot of uncertainty surrounding potato areas for the 2022/23 season within the NEPG (North-Western European Potato Growers) zone due to concerns over high input costs, which are adding significant financial pressure on growers. The price of natural gas, fuel and electricity has reached unprecedented levels, and these are all required to produce potatoes, with electricity largely required for grading, packing and storage.
Additionally, natural gas is a key feedstock used to produce fertilisers, and the continual growth in natural gas prices is driving fertiliser costs to record highs, causing many growers to reconsider usage. The significant cost pressures are expected to have impacted EU planting areas for the upcoming season. If potato production declines, prices are likely to remain firm.
However, the NEPG association released a press release in March assuring that global demand remains strong, thus despite the market uncertainty, some growers are expected to continue increasing planted areas. Total planted areas are likely to become clearer in May, as planting has now ended, and this will be a watch-out factor moving forward.