27 October 1995

face the great unknown…

Free market: Growers now

Next years potato crop will be unregulated and unsupported. In this special focus we consider how growers might adapt their variety and seed choices accordingly and consider some technical innovations which may help. Suzie Horne starts the ball rolling with a look at the way this unprecedented change will affect growers. Edited by Charles Abel

POTATO growers who churn out bottom-of-the-range produce for bottom-of-the-range prices will be most affected by the move to a free market.

Even in a well-supplied year, the top end of the potato market is always short of tonnage, points out John Anderson, economist at the Scottish Agricultural College.

"You only have to look at the price range to see that theres no shortage of demand for above average quality."

With the industry embarking on its first non-quota year in 1996, securing a market and aiming for top quality are two of the most important factors in successful potato production.

A national guideline for total plantings of 146,000ha (360,776 acres) has been set, and growers will get individual guidelines, although there is no quota. They will also be required to complete a planting return.

"If you want to expand, you should do it only on the basis of a known market," advises Mr Anderson. "Everyone should be thinking about securing contracts for a half to two thirds of their crop, and gamble only with the balance."

The industry is well on its way to a 50:50 ratio of contracted tonnage to free market supplies. While processing takes the bulk of the contracted crop, there is an element of forward contracting for bakers and pre-packing.

Mark Taylor, development manager at Cambridgeshire based co-op Fenmarc, reckons the only growers who can afford the gamble of not contracting a fair proportion of their crop are those who know they are capable of producing top quality pre-packing samples year after year.

While the returns of two good years may tempt growers to expand, there are many limitations to the extent of such expansion. The effect of high prices on consumption is a factor worrying NFU potato committee chairman Jim Padfield. "Theres no doubt that we have lost consumption in the past two years," he says. "On the optimistic side, we have gained enormously in export markets – especially in Spain, the Canaries and Scandinavian markets."

While growers have invested heavily in the industry in recent years, they are now facing a totally unsupported market with no intervention, and no-one knows what will happen in a surplus year, says Mr Padfield.

He is concerned that in this respect, the move to a free market represents an experiment on a grand scale, and that the effects of two good years may temporarily remove the reality of the potato market from growers thoughts. Most other EU member states have some form of support, through government buying programmes or the starch industry.

Much of the drive for the abolition of the Potato Marketing Scheme came from the processing sector, which was seeking greater supplies in a free market.

While many think that processors here have been slow to accept that they need to be paying better prices to encourage growers to take up fixed price contracts, there now appears to be a more realistic attitude.

At present, our relatively high prices are sucking in imports equal to 1m tonnes of raw potatoes a year. These comprise mainly chilled par fried chips for mass catering markets.

A longer term development is the possibility that there may be significant investment in processing in the UK. But the capital required means it would be a case of only one factory looking for around 1m tonnes of raw potatoes a year. Such a development is likely to take three to five years.

A potential site might be in a light land area where the skin finish wanted by the pre-pack trade cannot be achieved. Whether or not this competition materialises depends on the supply of potatoes and their comparative returns against other arable crops.

One of the biggest limiting factors to expansion of the crop area is land. Apart from rotation considerations, competition from combinable arable crops as well as from other vegetables such as onions and carrots means there is little room for expansion.

Despite the recent revival in potato profits, growers are wary of over planting. However, demand for cropping land is strong, with £500/ha (£200/acre) plus regularly being paid for rented potato land. Prices well in excess of £860/ha (£350/acre) have been reported.

Most of the drive to expand comes from existing growers. And while the trend to leave the industry may be slowed by its current fortunes, that trend is a long term one which will continue.

UK potato industry in figurescrop year June 94-May 95(provisional)

Number of registered growers14,000

Average area grown by 9,000 active growers*15ha

Raw potato imports390,000t

Processed imports (raw tonnage equivalent)666,000t

Total imports (raw tonnage equivalent)1,056,000t

Total potato exports (raw tonnage equivalent)330,000t

* Around 5,000 registered growers produce no potatoes. The number of registered growers in 1960 was 76,825; 1970 – 43,346; 1980 – 30,225; 1990 – 18,331. In 1994, 64% of the 141,000ha crop was grown by those with 25ha or more.