Potato growers urged to cut acreage by 10%
- Two heavy crop years coupled with consumption falling
- Producer numbers down a third in past 10 years to 2,150 registered growers in 2014
- 2014 acreage of 121,000ha (similar to 2013) produced 5.7m tonne crop – up 3% on 2013
- November estimated GB stock 200,000t higher than a year earlier
- North-west European potato crop of 28m tonnes is 4m tonnes above five-year average
- About 75% of GB crop is grown on pre-season contract or for a committed buyer
- More than 90% of processing material is grown on contract specifying varieties and quality
- RPI data for September 2014 to end of January 2015 shows 2.2% increase in retail price of potatoes
Potato growers need to cut acreage to avoid a third successive year of oversupply and price pressure, advises consultant Jay Wootton.
Mr Wootton of Andersons suggested a 10% cut across the board, but for some growers the answer would be to pull out of the sector.
Ex-farm average prices are the lowest for at least five years. Mid-January saw the free-buy average fall to £77.43/t, the lowest since 2009 and the lowest at this point in the season since 2002-03.
In addition to price pressure, some growers also have contract issues, as packers come under pressure from retailers. These issues include price reductions and/or reductions in the tonnages paid for at the full contract price. Some packers had been up front about changes to contract terms, others had not, said Mr Wootton.
If production costs were higher than what was being offered by contracts for 2015, producers should not ignore the evidence and should walk away more often, he said.
“Someone’s got to start saying ‘no’. Unless people do that, it won’t solve the problem,” he said.
As well as cutting acreage, Mr Wootton said growers needed to better understand cost of production, which should also be benchmarked. Some farmers could make more money from storing potatoes rather than growing them.
With negotiations for 2015 acreages ongoing, growers are reluctant to talk about their treatment by buyers. However, this week the Potato Council said low prices and surplus crop were putting huge pressure on contracts.
“Two seasons of oversupply are causing great pain for our potato growers,” said Potato Council chairman Fiona Fell.
“Success in reducing supply chain waste, coupled with a drop in fresh potato consumption, results in a new base level for production, well below what we have been used to.
“Contracts are an important means of managing volatility and risk, and need to be honoured on both sides. The whole industry needs to work together, from grower through to retail, to adapt to a dynamic market,” said Mrs Fell.
She urged growers who had not had contracts honoured this season to contact their farming union for advice and legal assistance.
Growers needed to grow what the market was asking for and to grow only what they knew they could sell, said Mrs Fell.
In 2013, retail volume sales fell 8%. However, total fresh retail volume rose 2% year-on-year in the most recent quarter, but was still down 2% for the 52 weeks compared with the previous year.
Potatoes are worth £4.1bn at retail level, excluding savoury snacks or ready meals.