There may be a reluctance to sign fixed-price contracts next season after potato prices plummeted to less than half of cost price, packers and marketers have warned.
Richard Phillips, director at Spalding packer KFF Potatoes, said growers will be looking for market commitment, but noted that there will be an unwillingness from both customers and suppliers to assign this to a fixed price.
Managing director of Spalding potato marketer Nene Potatoes, Paul Shepherd, said there are fewer contracts out there for next season, and those that are available are for lower volumes and less value.
“In the normal rules of the supply chain, contracts are taken out with the best endeavours from both sides. But when the free market is distanced one way or another, as it is at the moment, it makes life difficult, and contract conditions are severely applied. All of the conditions are brought to bear, and the destructive nature of the application of a contract is demonstrated. That is highlighted in a season such as this one.”
Despite this, Shepherd added: “There’s a fear factor that will see some growers sign contracts for next season out of fear of not being able to shift the crop.”
He said growers currently need around £127 per tonne to break even, with another £30 needed for storage, but at the moment, according to Shepherd, most white potatoes are selling for around £60 less than the cost of production.
The news comes amid fears that a rumoured move by potato giant Albert Bartlett to supply free potatoes into the public sector is putting smaller suppliers under pressure. One grower told FPJ that if larger companies start offloading free potatoes into the public sector, smaller packers and wholesalers who rely on this sector will be threatened.
A spokesperson for Albert Bartlett said: “We are looking at an activity with schools and the NHS, however we are not at a stage where we can give more details.”
Head of the NFU’s Potato Forum, Tim Papworth, said prices are still depressed, although he noted that there is slight growth in the processed sector, which is “generally climbing”.
“I think plantings will be down next season as people will be cutting back. We also need to be exporting more. I think we’ve been through the worst now, so things will now start to get better,” he said.
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