Tensions grow in the potato supply chain
Two seasons of over-supply are causing great pain for our potato growersl, writes Fiona Fell.
Twelve months ago Potato Council's 'Market Dynamics Report' highlighted that 2013 year-on-year retail volume sales had fallen by eight per cent, the equivalent of 133,000 fewer tonnes.
However, in 2014, just over 121,000 hectares were planted in again in Great Britain, a figure very similar to the year before.
A favourable growing season in 2014 resulted in a 5.7m tonne crop, which was three per cent up on the previous season. By November the estimated GB stock position was the equivalent to two boxes per hectare (200,000 tonnes) higher than a year before.
Great Britain can no longer utilise this level of production. The industry has been successful in reducing supply chain waste and coupled with a drop in fresh potato consumption; this results in a new base level for production, well below what we have been used to.
Our high stocks have been placed under further pressure by a North-West European crop of 28m tonnes, which is four million tonnes above the five-year average.
The result is extremely uncomfortable and very challenging for our grower base. Ex-farm free-buy prices, both at home and abroad, have been weak reflecting the supply situation. The GB weekly free-buy price fell to a new season low the week ending January 16, hitting £77.43/t compared to £152.09/t at the same point last season. This is the lowest it has reached since autumn 2009, and the lowest for the time of year since the 2002/03 season.
Volatility is set to continue across agriculture and contracts are an important means of managing risk.
It's paramount that growers work to build strong relationships with their buyers, based on trust and transparency. Although there's been some progress with shorter chains and longer terms, contracts only work when terms are honoured by both parties.
We encourage growers who have not had contracts honoured this season to contact their farming union (NFU, NFU Scotland , NFU Cymru) for advice and legal assistance with handling disputes.
As we head into the 2015/16 season, I would say this – grow what you are being asked to grow by the market. Grow what you know you can sell.
* Fiona Fell chairs the Potato Council
