Up until now, producers have been able to get pretty reasonable free purchase prices thanks to lower potato production in the NEPG zone and little impact from inflation. The potato industry as a whole, from seed growers to retailers to consumers, will be affected differently by higher contract prices and increased production risks.

Despite a greater hectarage compared to last year (512.400 ha) – a 2,9% increase (+ 14.421 ha), lower yields per ha (-6,3%) resulted in a total NEPG potato production of 21,69m tons (- 5,3%), or a drop of 1,2m tons.

“Demand for potatoes is good, with processing factories throughout North-western Europe eager to buy potatoes whereas processing units work at full capacity,” the latest North-western European Potato Growers (NEPG) report reveals.

Growing demand for processing potatoes in the 2023-2024 marketing year, combined with highly repriced contracts, may persuade growers to continue growing and producing potatoes. New or updated processing units and new factories (just constructed or scheduled to open in the fourth quarter of this year) have resulted in historically high contract prices that have increased by 30 to 45%. Processors in Belgium, France, Germany, and the Netherlands are desperate for more raw materials for the remainder of the current season and the 2023-2024 campaign.

These larger contracts should offset the much greater production costs and inflation that growers are experiencing. And maintain the industry’s appeal for growing potatoes for processing. In 2023-2024, processors will require at least 500.000 tons more. Growers face increasing risks, and force majeure is not usually acknowledged or included in contracts.

“Global warming, the rise of environmental constraints, and the structure of potato cultivation on rented land on an annual basis render potato production more risky and difficult. NEPG facts and figures (…) show that yields per ha have been going down during the last 10 years. The main factor leading to reduced yields is climate change, but in some cases, it is also a combination of problems linked to the soil (compaction, less organic matter content, nematodes, too short rotations…),” according to the document.

The Risk of Growing Potatoes on Rented Land

At least one-third (NEPG estimate) of potatoes are cultivated on rented land annually, which makes it difficult for growers to adjust their cropping practices while also ensuring that some of the added value goes directly to lessors or land renters who assume no risk.

Compared to 10 or 20 years ago, there are more risks today, and they are increasing. Farmers now have to manage several “new” hazards in addition to varying yields and free purchase prices (and to a lesser extent shifting contract prices). Climate change, geopolitics (such as the conflict in Ukraine), health crises (such as the Covid-19 pandemic), water availability, and tighter EU laws governing the use of fertilizer (mostly nitrogen, whether farm- or mineral-sourced) and pesticides are now all linked to risks.

“On top of that, contracts are more different (between processors) and difficult to fully understand than before. Finally, risks are usually (or could be) partly covered by insurance. Relatively simple “hail and storm” insurances are now also more complicated and expensive, having to cover most (all?) of the risks linked to climate change: drought, excessive heat, flooding, erosion, and mudflows…,” the NEPG experts concluded.

Seed production costs have grown, and there is little indication that purchasers will raise their seed prices. This may result in lower seed yield during the 2023 season. The NEPG seed industry could lose at least 2,023 hectares, resulting in shortages and increased prices for consumer farmers in spring 2024.