The Potato Council has called on retailers to increase the price they are paying for potatoes in what it is describing as a “watershed season” for some growers.
The organisation has warned the potato industry is in a “perfect storm of misery” with growers on fixed price contracts selling at below the cost of production and packers and processors also struggling to cover their costs from the retail and food service sectors.
It added 2012 could be a “watershed season”, with some farmers deciding that the risks associated with potato production were too high when compared with alternative cereal crops.
Harvest is estimated to be three week’s behind last year and only 71% of the crop has been lifted so far. At the same point in 2011, 96% of the crop had been harvested.
Latest figures show the combination of low yielding potato crops, increased crop spraying costs and increased wastage has increased the average costs to over £200/t. Growers are battling horrific conditions with sticky soil causing machinery breakdowns, adding to grading costs and causing storage challenges.
“Almost everyone is experiencing financial pain and there are some tensions in the supply chain as there is not enough margin to cover costs and purchasers are starting to force contract terms on growers who cannot meet volume commitments given in good faith.”
Potato Council chairman Allan Stevenson
“Almost everyone is experiencing financial pain and there are some tensions in the supply chain as there is not enough margin to cover costs and purchasers are starting to force contract terms on growers who cannot meet volume commitments given in good faith,” said Potato Council chairman Allan Stevenson, in an open letter to the supply chain.
“We urgently need some relief from price increases by retailers which can be shared by their supply chain. There is no sense in making a terrible situation worse than it needs to be in the British potato industry by holding down prices artificially.”
Meanwhile, the NFU has called on potato growers and buyers to talk sooner rather than later to deal with problems that could arise as a result of this season’s drop in yields.
Around 70% of all potatoes in England and Wales are grown on fixed price contracts and growers would normally be expected to make up any shortfall by buying potatoes on the open market.
NFU potato forum chairman Tim Papworth said that it was vital to deal with a shortfall of tonnage or quality issues as soon as possible and to build up communication with the contract buyer.
“I have already heard of some buyers taking a pragmatic approach because they recognise that the shortages have largely been out of the growers’ control,” he said.
“I believe this sets a good example of how relationships across the supply chain should work and I would encourage growers to talk to their customers and reach a sensible agreement.”