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Concerns continue to be voiced around European crop

Publication Date: 
17 August 2018

Aidan Wright, Analyst, aidan.wright@ahdb.org.uk, 02476 478 894 

The latest August press release by the North-Western European Potato Growers (NEPG) highlighted concerns surrounding the current state of the European potato crop. The full release from the organisation can be viewed here.

All of the NEPG countries have suffered from a lack of rain during key growth stages over the past few months, and this has led to a significant amount of the crop area experiencing water stress. Irrigated crops in Great Britain and the continental NEPG countries (Belgium, France, Germany and The Netherlands) have reportedly fared satisfactorily for the most part. However, only just under half of the total North-Western potato area has access to irrigation. In addition, the implementation of water restrictions by several regional administrations within the NEPG area has pressurised the situation further.

Non-irrigated areas have suffered heavily from the dry conditions and for many fields the rain has simply come too late to improve the situation. In fact in some areas, the rain has caused more issues than it has solved with reports of secondary growth beginning to emerge. Aside from secondary growth, other quality issues include increasing dry matter, which causes extra damage to the crop during lifting.

The concerns around this season’s crop have been reflected in the benchmark April-19 European processing potatoes futures contract. This has closed between €279/t to €320/t for the last two weeks and remains significantly higher at this point in time than April contracts in previous years.

With approximately 70% of the mainland NEPG potato area under contract, a reduction in yields will drive buyers onto the free-buy market to meet shortfalls in contracted volumes. With limited potatoes expected to be available on the free-buy market this year and increased competition, prices on the continent are likely to stay supported throughout the season.

Over the past five years (2012-17) the UK has imported 281kt of fresh potatoes from the EU each season, on average. A reduction in European production is unlikely to reduce imported volumes as in 2012/13, a season of low supply caused by adverse weather, the UK still managed to import 683kt of fresh potatoes. However, the likely price increase of these supplies over the season means that cheap European imports are unlikely to act as a cap on domestic prices this season, for some markets. This may exacerbate the problems that are expected to emerge in the domestic market this year.

While the full extent will be uncovered later in the season GB production is expected to fall significantly from last year. The GB area planted to potatoes is currently estimated to have reduced 3% this season to 119kha, the third lowest area on record (read more here). In addition challenging growing conditions have meant that for many, yields so far are significantly below average, particularly in areas which have not had access to irrigation. While the percentage of GB area dedicated to contract growing remains below that of the continent, a shortfall in expected supplies is likely to lead to a similar situation to that on the continent. Essentially increased competition for free-buy supplies would typically provide support for prices, which is unlikely to be capped by an influx of competitively priced imports.

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