Stability not volatility

7 February 1997

Stability not volatility

THE need for stable prices in the potato industry was a theme expounded by more than one speaker.

"When open market prices go to unrealistically high levels, some growers think they are making a killing," said John Craig, fresh produce controller of Stewarts Supermarkets in Northern Ireland.

"In fact, the only thing they are killing is their trade, as consumers look for alternatives."

To combat volatility, more farmers will form partnerships with retailers, specifying minimum, and maximum, prices.

"This gives the farmer the certainty and confidence to reinvest; and it allows the retailer to acquire the required variety and quality."

Stuart Edwards, managing director of Fenmarc Produce, added that supermarkets were now demanding that potato prices behaved in the same way as competitors such as rice, pasta and pizza.

"Potatoes have suffered horribly in terms of market share in the last two years because of their high price," he said.

But Ron Davis, marketing director of the Potato Marketing Board, said even in recent years when prices rose 70%, consumption only fell by 10%.

This "price inelasticity" has had the opposite effect this year, with lower values prompting only a small upturn in consumption. "Image is important," he said.n

Ron Davies: Demand for potatoes is inelastic – able to stand price fluctuations.

John Craig: Combat price volatility by forming partnerships.

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