POTATO growers start the new year with the prospect of higher prices than last season – but there again, they couldnt be much lower.
Ex-farm average values edged up in the week to Dec 12 to £75/t. Although 41% higher than 1996, this is a far cry from two seasons ago when spuds were typically changing hands at £165/t.
On the supply side, the British Potato Councils first estimate of the 1997 crop is 7.03m tonnes, up from 6.94m tonnes. The increase came as higher yields more than offset the 8% downturn in planted area.
"Its quite a big crop – but theres also quite a quality problem," says John Anderson of the Scottish Agricultural College.
The likelihood of an over-supply situation will be eased, therefore, with grading-out diverting as much as 20% of some packing samples for multiples into dumps or stock feed troughs.
This should help keep values above year-earlier levels, although a mild spring – and with it the early arrival of new-crop varieties – could put prices under pressure, says Mr Anderson. "It could put a question mark over May."
Quality issues are behind the big price variations, with BPC figures showing a range between £25 and £160/t. While this is likely to remain – or broaden – any rise in the upper ceiling will be limited by the potential of imports.
EU-wide, the crop is down 3% – but it is still on the high side of average. British exporters, meanwhile, arent thanking the strong £ sterling – but had shifted nearly as big a volume by mid-December as in the corresponding period last year.
Once again, the best crops in environmentally-controlled buildings will be a world away from the poorer ones in ambient stores. "Good storage pays from day one," says Mr Anderson.
But cash flow considerations may bring more samples on to the market early, with mixed farmers facing lower returns from lamb, beef and arable enterprises.
While wastage is currently high, this should fall as growers – having sold the bottom end of the quality spectrum first – are left with their better samples.n
MANAGING risk is one of the greatest challenges facing UK agriculture as profits slump to new lows.
Risk comes in many shapes and sizes, including currency change, price variability, on-farm accidents, taxation issues and interest rate rises, not to mention the climatic and political risks.
Tackling these risks requires a management strategy, and that is the theme of this years Farm Finance supplement. We talk to bankers, financiers, surveyors, tax specialists and accountants to try and pick a path through the financial jungle. See pull-out section for more details.