Over-planting threat to EU potato prices

By Philip Clarke

ANOTHER year of depressed potato prices is on the cards, unless growers across Europe cut plantings drastically.

Traditionally, the market has moved in cycles, Agra Europe director Guy Faulkner told the recent Potato 2000 conference in Rome.

Years of high output and low prices are followed by periods of falling production and rising returns.

But that pattern could be broken this season, as farmers face a planting dilemma.

The area of potatoes is normally influenced by the relative profitability of the EUs supported crops.

But the introduction of the Agenda 2000 reforms from next harvest suggests these will also struggle financially, giving growers more incentive to stick with potatoes.

This will be exacerbated in the UK, where the strong Pound is having an even more marked effect on cereal, oilseed and sugar beet prices.

“If returns are to be improved, then the EU potato industry needs at least a 5% drop in plantings,” said Mr Faulkner.

That would take about 2m tonnes out of production to 46.4m tonnes, pushing prices up from this seasons Euro72.5/t (44/t at todays Euro rate) to a more respectable Euro110/t (67/t).

“But I have a horrid feeling this is optimistic.”

A 2.5% cut was more likely, which would give a 47.65m tonne EU harvest and an average price of around Euro90/t (55/t).

The trend towards higher yields would add to the squeeze.

This season, output hit record levels in the EU at 35.1t/ha (12.7t/acre).

Further increases are predicted “unless the weather comes to the rescue”.

Longer term, the accession of central and eastern European countries would increase competition in the EU market.

Poland, for example, currently grows the same area as the EU, producing 25m tonnes annually. “Most of that goes as pig feed,” said Mr Faulkner.

“But that is going to change, as it has in the former eastern Germany.”

Despite this, Robin Pooley, chairman of Cambridgeshire-based Abbey Group, is optimistic about long-term prospects.

“I am confident the potato market will expand in Europe.”

Enlargement to the east would open real opportunities for technology transfer, which in turn would generate trade.

Fears that this would rebound on the west with a flood of cheap potatoes were groundless, as production costs would tend to equalise as central Europe became more prosperous.

The growing demand for fast food would also work well for potatoes, with an acceleration in the trend towards processed products.

Potatoes could also find new outlets as non-foods, modified starches, medical uses and flour production for the snack industry, said Mr Pooley.

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