Crisping farmers: Profits not possible with new contracts
By Tony McDougal
POTATO growers claim new lower priced contracts demanded by crisping companies will drive producers out of business and force firms to source more potatoes from the Continent.
They claim the new contracts, some of which were offered to the merchanting trade on a tender basis, have forced down prices by 15%.
Prices have fallen
Members of the Potato Processor Growers Group (PPGG) say top ex-field prices have fallen from £95/t in 1995 and 1996 to just £83/t, and were particularly concerned about crisp firm Golden Wonders lower contract prices. They claim problems also arose last year with Pepsi-Cola.
John Clark, PPGG chairman, said the crisping contracts were offered without any discussion with growers, or any attempt to understand the economics of good quality crisping potato production.
"These contracts are being offered at prices that leave no possibility for the average professional grower to recover all their costs, even with the production of a good yield; and with no reward at all for commitment and risk."
As a result, Mr Clark said some growers, with other options would take less risky alternatives, choosing crops that demanded no water for irrigation and reduced management input.
"Established growers and merchants who have been involved in the industry for 20-30 years are considering their future in the light of this continuing unsatisfactory situation. If these mature, successful businesses cease to produce and supply, the vacuum created may not be filled in the UK."
Mr Clark, who farms at Farnsfield, near Newark, Notts, said the alternative for the processing companies will be to source supplies from the Continent, which will leave them facing increased haulage charges.
"These potatoes may not be available in a shortage year. This situation must not happen, or all of us involved in the UK processing industry will be losers," headded.
Ross Threapleston, Golden Wonder general manager (potatoes), said the company had undertaken a comprehensive review of its supply chain but insisted that its three major suppliers had agreed price, quality and service levels for 1997/8. Growers outside the three major suppliers accounted for abound 3% of supplies.
While acknowledging the competitive pricing system in operation and the current market difficulties, Mr Threapleston said the company would not have to source replacement potatoes from overseas.