The cost of growing potatoes has risen by about 40-50% over the past five years, mostly on the back of significantly higher fertiliser and energy prices, Neil Cameron of Bidwells told growers at British Potato 2011.
The average cost of production for ware crops had increased from about £80/t in 2006 to £124/t this season based on a yield of 45t/ha, before rent and finance was taken into account, he said.
When included, rent and finance added a further £20/t to the cost of production. The cost of growing processing crops was typically about £25/t less than ware, but had experienced a similar level of increase.
Fuel and fertiliser prices were the main driver of the current increases in costs for growers, Mr Cameron said. Costs of production were forecast to rise again in 2012 to £110/t for processing crops and £132/t for ware.
The increased costs of production were significant, he said. "These are huge changes."
At a grower level, consolidation into a smaller number of specialist growers, growing larger quantities of potatoes, with higher capital investment costs, meant it was harder to stand volatility in pricing, he said.
"So I would encourage everyone to think about how they are selling potatoes and are they getting a price that matches their cost of production. Do they know what price they are getting this year and next year and how that will reflect changes in the cost of production in that period?
"As an industry, if we don't think about that we will have problems going forward."
Increasing yields was one way growers could bring down their cost of production, he said. "Yield increase can have a very big impact on your cost of production.
"We are seeing in the market some newer varieties with significantly higher yields in both the processing and ware sectors.
"But a lot of potatoes are sold as a named variety, Maris Piper, Desiree, King Edwards, etc. These varieties have been around for a long time and it is very difficult to change their yield.
"The way we will get significant yield increases is by changing varieties. As an industry we need to decide whether we want to sell those named varieties, and watch costs go up or sell new varieties, and keep costs down by improved yield.
"I would say to the industry as a whole, if we want to keep potatoes we need to invest in breeding to make sure we get new varieties that will help us achieve that."
For more on British Potato 2011 see our dedicated page.