The balance between supply and demand in the potato market has stabilised after many growers responded to a difficult 2014 and reduced plantings by 8%.
So with a tightening up of the market, should farmers be selling now rather than holding on to crop? Also, where does this leave prospects for 2016?
GB potato prices are currently running about £27/t above last year, with the AHDB average falling from £151.51/t on 18 September to £136.73/t on 30 October.
However, with free-buy values averaging £136.23/t on 30 October, returns are not as high as predicted several months ago, says Jay Wootton, director at farm business consultant Andersons.
“Growers should try to move stocks early as storing them will cost more than you are likely to make in the current market.”
Retail demand has increased marginally over the past year, with sales rising by 0.8% in the 52 weeks to 16 August, to 2.1m tonnes. However, that was mainly driven by discounting, with the overall value of sales down by 3.8% to just under £4bn.
According to Arthur Marshall, market intelligence analyst at AHDB Potatoes, GB farmers are estimated to have planted 7.8% less this year, at 111,600ha. So far yields appear to be average to above average, but production will still be well down.
“Even if there is a record yield, 2015 will still be the fourth lowest in terms of production since 1960, putting a tightness on the market,” he says.
Production among the North-Western European Potato Growers (NEPG) countries – GB, Belgium, the Netherlands, France and Germany – is estimated to be 14% below last year, at 24.5m tonnes. This is due to average yields being down by 10.7% at 46.5t/ha, and a 3.7% reduction in planted area to 527,110ha.
Yields appear to be down across the whole of Europe, largely due to the hot, dry summer, with Poland forecasting a 9% reduction in yield.
“In 2013, Poland became the third-largest export destination for GB potatoes after it had a small crop, and this year Poland is looking to produce even less, so this may offer export opportunities for GB,” says Mr Marshall.
However, Mr Wootton warns growers not to get complacent about the market and increase their plantings next year.
“The market is still under pressure, so be careful about selection of land and grow the best quality. Do not plant more acres, and address whether what you are growing is profitable.”
Contract prices and availability for 2016 will become clear in a month or so. “It is all about dialogue and communication,” says Bruce Kerr, director of AKP Group.
He advises growers to work their planting decisions back from the market in preparation for next season, but does not envisage increasing plantings himself next year.
“There is very little room for speculative growing now; the stakes are too high with current growing costs,” he says. “It is just not sustainable to be growing a crop that does not have an end home any more.”
With a reduced area, seed supply may be tighter. However, seed availability is adequate so far, with above-average quality, so prices remain reasonable, says Mr Melrose.
“Some varieties such as Maris Peer and King Edward may become sparse as there is a good demand for them at present.”
However, many farmers are holding off buying chipping varieties such as Maris Piper while they wait for the availability and price of Dutch variety Agria to be announced.
Egypt specification change could increase seed export price
As of 2 November, GB farmers had lifted more than 100,000ha with most expected to have finished lifting by the end of the week.
In Scotland, weather-related delays have put pressure on the seed export window, says Alistair Melrose, general manager at AJ Allan (Brechin) Potatoe Merchants.
“The Scottish harvest is two to three weeks behind last year and we should be starting to export seed to Egypt as the window closes by mid-November.”
Unfortunately, Egypt recently reduced its maximum tuber size specification from 60mm to 55mm top riddle, which could cut demand for some varieties by 25% and slash GB exports to the northeast African country from 52,000t last year to as low as 40,000t this year.
“The market looks difficult and there is likely to be a lot of soul-searching going on,” says Mr Melrose. Growers will need to assess contracts and plantings for next year, taking the new stipulation into account.
Robert Burns, head of seed and export at AHDB Potatoes, says this change in market specification could lead to tighter supplies, driving the price of seed exports up, and potentially balancing against the loss of tonnage.
“GB usually exports 20,000-30,000t to Europe each year, but due to lower yields on the Continent there is potential for more export opportunities,” he says.
India – the second biggest potato market in the world – could provide another opportunity to expand the GB export market.
“It is a slow burner, but India is short of processing supplies, so there may be some interest there.”