Higher production expenses, primarily from energy, fertilizer, and transportation, affected potato farmers throughout 2022. The cost of production and storage is rising at an unsustainable rate, which is putting pressure on growers’ profit margins.

According to a recent Mintec expert analysis, due to greater year-over-year (y-o-y) electricity rates, potato storage and drying expenses also increased dramatically. To battle rising drying and storage expenses, several producers sold up their inventory earlier in the season.

“In the 2022/23 season, demand for free-buy packing supplies was muted as many supermarkets contracted a higher proportion of their requirements to limit exposure to volatile potato prices. Therefore, significant driving factors, including higher input costs, have not been fully reflected in higher retail pricing. According to market sources, contract prices, largely finalized in Q4 2022, have risen by 20%-30% across the EU for the 2023/24 marketing year (MY) to account for this. This could potentially result in higher retail prices when the 2023 crop is harvested,” the analysis reveals.

The profitability and sustainability of the sector are in jeopardy in the lack of financial government support for farmers, which could limit future investments and possibly result in fewer planted areas the next season. There is a chance that some farmers will decide to cultivate alternative crops, like grain or oilseeds, in succeeding seasons to increase their yields.