According to analysts, European potato contracts for the 2023/24 season have risen by 20-30% as buyers look to shore up supplies in the face of rising production costs and potential falls in production.
As well as higher production costs caused particularly in rising prices for fertiliser and fuel, the electricity costs associated with storage for most growers (without their own on-site energy generation) have increased significantly. This prompted many growers to sell crops earlier than usual in 2022 so they didn’t incur storage costs, and overall many growers across the continent have looked to significantly reduce their production in 2023 to reduce risks and minimise the impact of loss-making crops.
Analysts Mintec report that the situation was exacerbated by low packing demand from supermarkets as they sought to keep retail prices low and protect customers from the effects of food inflation. Despite ongoing reluctance by retailers to pay more, the company reports that contract prices (many of which were agreed at the end of 2022) for the 2023 crop across Europe are, on average, 20-30% higher than the previous year, which could lead to higher prices later in the season.
“In the absence of financial government support for farmers, the industry’s profitability and sustainability are under threat, which could limit future investments and potentially lead to lower planted areas next season,” says Mintec’s Alice Witchalls. “There is a risk that in consecutive seasons some farmers will opt to grow alternative crops, such as cereal or oilseeds, to achieve higher returns.”