BusinessMarkets & PricingLow Production, Water Concerns for European Potato Industry

Low Production, Water Concerns for European Potato Industry

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Concerns about potato area, seed potato availability and lack of water access in Europe is weighing on the potato market, a March 20 news release from the North-western European Potato Growers (NEPG) said.

Free stocks in various countries are limited. Latest inventories show free stock is 13 per cent lower than last season and less than 20 per cent below the five-year average. With good demand from the industry, the mood remains positive, the NEPG noted.

There are questions about how hectareage within the NEPG countries will develop for the next growing season. Usually a sharp increase in contract prices would have a direct impact on the size of the potato area but a recently tempered grain market will affect this, the NEPG said.

“An expansion of the potato area (due to an historical rise in contract prices) of a few per cent seems the most likely scenario under these circumstances. Whether this will actually happen remains to be seen,” the release said.

The NEPG noted there doesn’t seem to be much room in the potato area for structural expansion in the Netherlands and Belgium due to a lack of new potato land, the Green Deal and the increased prices for land rent. Expansion in potato area in the Netherlands can only happen at the expense of the starch or seed potato area, the release said. In the traditional clay growing areas, growers seem to prefer the highest possible contracted tonnage, but this doesn’t make for a clear expansion.

In the NEPG zone, there are expansion opportunities in northern Germany due to a shift from table/starch potatoes to chipping potatoes. However, this region is located further away from the epicenter of the processing capacity in the south of the Netherlands and Belgium, NPEG noted. In France, the hectareage gain will also come from a switch from seed and table potatoes to chipping varieties.

“In addition, in France and Germany not all areas are suitable for intensive potato cultivation due to lack of irrigation options. New legislation in Belgium, be it linked to nitrogen use or a potato cultivation ban (among other crops on ridges, maize,…) in zones with high erosion risks on thousands hectares of land could reduce potato area in the coming years.”

For seed potato production, the NEPG zone could lose at least 5,000 hectares or more of seed production, the release said. The reduction is mainly due to a switch from seed production to more area for processing varieties due to low profitability in the seed sector with new constraints regarding tougher legislation on pesticide use.

There’s also concern about water supply, especially in the southern regions of the NEPG zone. The NEPG noted drought risk is a growing concern.

“The consequences of last summer’s extreme drought are still affecting water resources. There are large regional and country differences, but moisture reserves are still low (albeit some rainfall during the last fortnight), especially in (potato) regions more to the south of our zone.”

The release noted if the hectareage increases and the harvest is above average, this could have major consequences for the free market leading to little buying interest.

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