AHDB Shares Exclusive Views on Potato Trade 2017
Potato processors from Great Britain may have to look to import raw products from further afield than usual, perhaps looking to countries such as Poland, where the harvest has been better than in NEPG countries, says Arthur Marshall, analyst AHDB Potatoes, for PotatoBusiness.com.
By Ioana Oancea
One of the major challenges for the upcoming period is to ensure the requirements for raw products. “However, varieties and specifications can be different to local supplies, so the challenge will be to source imports that service their requirements. Also, processors will be aware of the need for rigorous plant health checks,” Marshall says.
The AHDB analyst explains that potato production was lower year-on-year across the NEPG countries (NL, B, FR, GB, and DE). At 5.2Mt, the total GB potato crop was the fourth-smallest on records going back to 1960. The total NEPG crop (excluding seed and starch) was the smallest since 2013, although this comes against a rising trend with demand for raw material in Belgium and the Netherlands continuing to grow, according to AHDB data.
“This has already meant a generally tight supply situation, with prices rising in response. The main indication of whether supplies are continuing to tighten will be from how stocks levels develop,” Marshall continues. However, as the prices consolidate across the NEPG, they suggest that the tighter supplies and higher prices will affect most of these countries.
Many processors, both in GB and elsewhere in the NEPG, source the majority of required supplies on contract, and this continues to the main way to manage volatility in both price and yields. Supply chains tend to be well integrated which, helps processors to ensure that they are able to source the right amount of the crop, as Marshall explains. Recent trends in GB plantings have included a shift towards newer, high-yielding, processing varieties with lower levels of waste. See here GB Plantings by Variety 2011-2016!
On the other hand, retail market prices are often much smoother than farm gate prices. “However, if the high farm gate prices continue in the longer term, there could be pressure for retailers to begin to raise prices. In GB and likely elsewhere, the growth of the hard discounters Aldi and Lidl over the past few years has contributed to strong competition among retailers, which may limit the appetite to raise prices unless other retailers also do so,” Marshall says.
Still difficult to predict the impact of BREXIT
Until we know the details of any deal that may be made, it is too early to be able to tell what the eventual impact of Brexit may be on potato prices.
“We do know that the vote and subsequent speculation about the nature of the deal weakened the pound. This meant that, for a short period in October, GB prices for processing material became noticeably cheaper than continental values, although, since then, the weaker pound has contributed to the rising prices in GB.
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