Protect potato margins with a contract

Potato growers are being urged to review their acreages and marketing plans for the coming season.

A weak market has meant a relatively high carry-over of stocks into 2014, as growers held on in the hope of higher prices.

However, retailers have kept prices high, a strategy that has also suppressed demand.

Farm business consultant Andersons’ Jay Wootton said growers should consider their cropping plans to address potential oversupply of the 2014 crop.

“There are just too many tonnes and not enough demand. Growers could cut their acreage by 10% and still make the same or more money from more rigorous land selection and attention to detail. Long term that would result in a more stable market,” said Mr Wootton.

The sodden start to 2014 has hindered first early planting in the south-west of England and in Wales. Growers with seed on farm are likely to go ahead as planned.

See also: Potato meet calls for transparancy

Neil Cameron, agri-business and supply chain consultant for Bidwells, said this would put further pressure on prices in the early and mid season. The current average price of £153/t compares with £249/t a year ago.

“The early market is dominated by geographical location and there is likely to be a shortage in supply followed by a glut as the second early harvest starts in East Anglia,” he said.

“Those operating on a free-trade basis will need to market their produce well and wait for the right moments,” said Mr Cameron.

The main crop area is expected to return to similar levels as in 2012 after plantings dipped in the late and cold spring last year, so production is likely to be high later in the season too.

Mr Cameron sees it as a year for contracts, which give some stability to growers in a historically volatile market.

“It’s too late for the early growers to seek a contract, but not for the main crop, where there may still be processing tonnages up for grabs.

“This will give some insurance in what could be a tough year for potatoes,” said Mr Cameron.

Growers needed to examine exposure to risk and seek a profitable contract to give some stability, said Mr Wootton. “The key factors are to understand your costs and ensure there is a potential profit for a level of quality you know you can grow.”