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Analysis Potatoes
Today 11:25 am – Jurphaas Lugtenburg
The demand for fries, chips and other potato products is good and the opportunities to expand the potato area in the EU-4 are limited. Rabobank expects that the potato market in Northwest Europe will probably continue to gain momentum for a while, partly because of this.
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The new potato season has barely started. Many growers are eagerly waiting for a dry period to get the pots in the ground. The prospects for price formation are not bad, as can be concluded from an analysis by RaboResearch on the potato market. For the fourth season in a row, an above-average potato price appears to be on the way, according to the bank.
Good demand for fries
The demand for chips and fries remains good according to Rabobank. European demand for chips has grown by approximately 2% per year over the past five years. The global demand for frozen fries shows similar growth. International trade in frozen potato products has grown by 3% per year over the past five years. “Belgium strengthened its position as the world’s largest exporter of frozen fries. In 2023, Belgium exported 800,000 more tons of frozen potato products than in 2018. This meant an additional need of 1,600 million kilos or 20,000 hectares of potatoes,” writes RaboResearch.
Relatively high prices are usually a sign for growers to expand the acreage. According to RaboResearch, the sector is reaching its limits when it comes to growing acreage and increasing yields for various reasons. There is a high demand for agricultural land (partly also for other activities), stricter regulations in the areas of biodiversity, water quality and crop protection and there are sustainability requirements from buyers. Climate change, which can lead to more extreme weather conditions, also makes cultivation challenging. Opportunities for expanding potato cultivation lie mainly in Northern France and Germany, according to RaboResearch. There is a shortage of seed potatoes for the 2024 crop year. This puts a brake on area expansion and the use of oversized seed potatoes can have a negative effect on quality and therefore yield. The wet start to the new season also does not help to achieve top yields.
Rising cultivation costs
For growers, it’s not all gold that glitters. Cultivation costs have risen sharply in recent years. In 2021 and 2022, the prices of fertilizer and energy, among other things, rose sharply. These prices fell again in 2023, but Rabobank does not expect prices to fall to pre-2021 levels. Many other cost items such as seed potatoes and machine maintenance have risen further.
The relatively high prices for consumption potatoes conflict with the importance of maintaining the seed potato area. “The question is how quickly the area of seed potatoes can be expanded again. Although the prices of seed potatoes have risen, the cultivation risk of seed potatoes has also increased. This is mainly due to increasing weather extremes and restrictions on the use of crop protection products. In addition, the production of alternatives is for seed potatoes, mainly consumption potatoes, has become relatively more attractive because their prices appear to remain at a high level,” writes Rabobank.
