5 July 2002

Cost pressures mirror those in UK

Just what is the true threat

to UK growers from cheap

potato imports? A recent

BPC study tour visited

France, Belgium and the

Netherlands to find out. We

report on its findings

WHEN 0.5mt tonnes of raw ware potatoes and the processed equivalent of a further 1.1m tonnes flowed into Britain in 2000/01, alarm bells started ringing.

Just how low were mainland European production costs if it was possible to cover the £30-60/t haulage cost and still make a profit?

Not low enough to make such activities sustainable. That was the key conclusion of most British growers on a recent British Potato Council study tour to France, Belgium and the Netherlands.

"When those potatoes were sent, it wasnt with a smile about a great new opportunity, but grim desperation because the loss would be lower than if there was no sale at all," says BPC processing supply chain manager Paul Turner.

"In reality,current prices in mainland Europe are probably not sustainable and growers there face an unsettled period of rationalisation."

That view is shared by Lancashire grower Colin Bradley. "Some of their land is better, factories are set up to make better use of the entire crop and haulage/fuel is cheaper. But, land is expensive, many units are too small to achieve economies of scale and generally they seem to lack access to good market information."

Graham Elder of East Lothian Potatoes agrees. "I expected to see much stronger co-operation, sharing of resources, better collaboration on crop marketing, more government support and more relaxed protocols. But this was not the case.

"Holland held the biggest surprises as we tend to think of them as highly organised and able to achieve significantly lower production costs. Yet we found this far from the case," he adds.

Among the most impressive farm visited was Jean-Pierre van Puymbroucks in the Walloon region of Belgium, which was much larger and more specialised than most Belgian farms.

With his parents, he grows 100ha of potatoes with long-term storage for 4500t. Based on a non-irrigated saleable yield of 50t/ha for the chipping variety Santana, production costs ex-field were put at about k70-76/t (£45-49/t).

They have a two-year processing contract paying k87.5/t (£56/t) mid-December and k106.1/t (£68/t) mid-June. The first 40t/ha is all contracted to one processor and is hauled 200km to their French factory or 350km to its Dutch counterpart.

Notably, yields in 2001 were only 42t/ha, potentially pushing the declared cost of production above the ongoing contract.

Tour participants also estimated that at least £1m had been invested to get this potato enterprise to its current level of efficiency.

Doubts were expressed as to whether the production costs quoted could cover depreciation and finance costs for this. What cost is put against family labour was also questioned.

Much more typical of Belgian farmers was Gerard Dardenne with 25ha of potatoes on his 100ha farm. Now unwilling to sign any contracts he sells on the free market and also aims to market as much as possible direct to consumers at twice the price. This year his mid-season bulk sales of Bintje fetched about k100/t (£64/t) and Desiree sold at k80/t (£51/t).

In France, Hubert Pamart is among those who have already pulled out of processing potatoes having previously grown about 60ha of Saturna for crisping. "Poor prices, disappointing yields and higher wage costs all influenced the decision," he says. "Now we have fewer staff and that has put us in a better overall position."

An important factor in this was the imposition of a 35-hour working week (with a guarantee of pay for the equivalent of 39 hours) and an absolute upper limit of 1940 hours worked in any year. Typical total cost a man is about k30,000 a year (£19,187 a year).

Fellow Frenchman Arnaud Delacour, who grows 50ha of potatoes on his 300ha unit, shares these concerns and has seen his income fall by 20% in recent years. "We are reducing production costs – for example, using blight forecasting to reduce spray costs, but we also have to hope that those selling below their cost of production come to their senses.

"Information sharing is key to achieving this," says Mr Delacour, who is also vice-chairman of the French processing grower organisation FNPTI. "Growers have to learn to use market information and link plantings to market demand."

He puts production costs at about £2500/ha from the field and around £3000/ha out of store between April and June, with Saturna typically yielding about 40-45t/ha.

A local processor is paying £57-64/t for the variety – equating to £2280-2880/ha. Instead, the 600t remaining in store are destined for Britain at an unwashed ex-farm price of about £96/t.

If anything, the mood in Holland was even gloomier. Again the voluntary grower organisation POA, whose members grow about one-fifth of the total crop, sees better market information as key to improving the situation and has developed a dedicated statistics system.

"Too many growers lack reliable market information and are uncertain of true production costs," says POAs Diny Punt. &#42

Coming soon to a factory near you! Tour participants inspect 600t of Saturna in Arnaud Delacours 1400t bulk store. The crop is destined for Britain and he will receive about £96/t ex-farm unwashed.

"We cannot survive if prices stay where they are," says Dutch farmer Joris van der Meer. His wife already works off the farm and resources are shared with neighbours. He grows 7ha of potatoes on his 60ha unit and is unable to produce crops at the processing contract price. This seasons crops were sold on the free market for k85-100/t (£54-64/t).

Belgian farmer Gerard Dardenne is keen to sell as much of his crop as possible through his farm shop, where average prices are twice those achieved on bulk sales. The yield from about 3ha is sold this way.

Jean-Pierre van Puymbroucks farm is rare for Belgium – being much larger and more specialised than most. Yet even here, labour is almost entirely confined to the family. During key times, Jean-Pierre and his parents work 20 hours a day. Thanks to heavy capital investment, the three family members can fully prepare 20ha of land in a day.

Two-way trade. The Verhagen BV grading facility – one of the top five in Holland – has imported about 3000t from Britain this year to meet onward export demand. The bright clear finish of the crop, mainly Estima and Cara, is appreciated and the cost was about k70-100/t (£45 -64/t) delivered to the plant.

More info

The BPC has published a report on European processing potato production and each of the tour participants will also be holding feedback meetings. Call Paul Turner on 01347-833056 for details. Information on European potato prices is also available in fax and e-mail bulletins.