In a recent discussion between Avebe’s Agro Director, Arjan de Rooij, and Members’ Council member, Annelous Groenwold, the company’s representative said that the increase in spud production costs can only be passed by the cooperatives to their customers.

In this respect, Annelous Groenwold talked about her and her fellow farmers’ concerns in these difficult times. Even more than laws and regulations, inflation is now causing them hard times.

“We have a growth plan for peat colonies at home. You already start incurring costs for revenues that won’t arrive until September/October to May next year in the spring. Liquidity is under pressure. Prices of fertilizers and plant protection products have risen sharply, as have those of seeds and seedlings. The cost price came under pressure even before the growing season, and growers are wondering what awaits them for the rest of the year,” Groenwold said to de Rooij.

Arjan de Rooij replied that as ‘an arable farmer and a member of Royal Avebe’, growers like Groenwold have only limited options to recoup that increase in costs for necessary input such as fertilizers, crop protection products, and fuel in productivity improvements.

“Farmers have always striven for optimal productivity. Avebe has to earn this in its starch potato growing operations in the market. On the positive side, our fellow producers in Europe and their potato suppliers face similar cost increases. For that reason, the best approach is to pass on these increases to our customers,” de Rooij added.

Performance Price

Regarding the performance price Annelous mentioned that from what she heard in the field, the performance price is rising, but has to rise more.

“Avebe notes that the current situation also creates opportunities. That’s good, but it’s also very necessary because otherwise, growers will have to contribute financially,” she said.

In response, de Rooij mentioned that Avebe’s efforts should increase its earning capacity, the extent to which added value is created.

“Since conditions have changed in such a short period, we need to achieve this value creation more quickly. First of all, by selling our products in the market at a higher price and working on our costs and how we produce and process potatoes,” he declared.

Ukraine War and Repercussions

Despite the huge increase in the cost of energy, packaging, and transport to Avebe’s customers, the campaign price for 2021 was higher than the previous year, one of the reasons behind that being the war in Ukraine.

“For the new season, we expect to be able to pass on the increased costs in the cultivation and processing chain to the market. The performance price is expected to take a big step next year. But the uncertainty in the market and the enormous cost increases mean that this will not happen on its own. The intention is clearly to exceed one hundred euros per tonne. The war in Ukraine is causing a fluctuating market in raw materials and energy. This creates uncertainty but also opportunities in the market. Based on the new reality and the pressure on the liquidity of our members’ businesses, the basic price will be at a significantly higher level than last year,” according to de Rooij.

He added that his company also faces significantly higher energy costs for processing potatoes.

“Processing a wet product into a dry end product is quite energy-consuming. This is a substantial challenge and creates uncertainty. Transport costs also depend on container companies. In April, for example, the coronavirus led to lockdowns in China, such as the one in Shanghai. This has a major impact on the port there, resulting in delays and price rises,” he explained.

Laws and Regulations&Farm to Fork Issues

As well as serious concerns about price setting, Groenwold said that it is also difficult for farmers to remain calm in the face of ever-changing laws and regulations.

“People feel attacked and that they are constantly being blamed. This happens time and time again and results in anger and frustration. At our business, but also that of colleagues. Avebe immediately took a stand against this, together with the Branch Organization for Arable Farming and other parties in the chain. On the one hand, that gives a lot of confidence. But it also frustrates growers that so many parties have to put their energy into plans that have been thought up behind a desk and have no connection with actual practice. And this is precisely when we most need innovation and market development to cope with rising cost prices,” Groenwold declared.

When it came to Farm to Fork Issue during the discussion, de Rooij said that there is a lot of pressure on agriculture throughout North-West Europe.

“Just look at the European Union’s Farm to Fork strategy. This strategy aims to increase biodiversity, protect groundwater and surface water, reduce the use of plant protection products and achieve organic farming objectives. Individual companies are also aware that we want and need to adapt. We have issues with the speed at which this has to be done and the uncertainty it entails. Policymakers ignore the fact that you make investments for ten or twenty years on a farm. With laws and regulations changing so rapidly, this is not possible,” he concluded on this subject.

The potato growers and cooperative managers met once again in person, with serious concerns being shared. This time, where Arjan de Rooij saw opportunities, Annelous Groenwold sounded a more critical note: “We’re on the right track, but we need to go further.”

Avebe is a cooperative of starch-potato growers focused on the market.