This quarter has thrown up a number of challenges for growers and suppliers, but the sector has pulled itself together to turn the situation around and get supply back on track.
Insiders were optimistic to start with, following a promising run of calm weather to the end of July - but the high hopes were short-lived once the rain set in at the beginning of August. Some of the wettest conditions on record hit various regions, mainly in the West and the Scottish borders, while areas in the East have escaped relatively unscathed and good harvests are expected.
But the sun finally reared its head in September and since the weather picked up, soils have started to dry out and lifting has increased, marking a welcome change for the sector.
Growers have been able to get into their fields and get to work on their crops, but the main focus has been to shift lower-value material that may not be suitable for long-term storage, rather than filling stores. Most crops are being sold on immediately. Some crops with suspect storage quality or excessive soil are being loaded into short-term storage.
The wet conditions have been conducive to pests and disease, with growth cracking and wet rot increasing waste, while flood losses are still being assessed in fields alongside rivers in Herefordshire and Worcestershire; although only nominal losses are expected.
Yields are variable, though it tends to be better in later-planted fields, and product quality is generally better than expected. Movement has returned to schedules, with supplies coming mainly from contracts.
But while some growers have had to count the cost of the rollercoaster summer, most are optimistic for the rest of the season. “The last three months have seen us go from optimism to pessimism and back again,” says one insider. “The crops were looking pretty good and made steady progress through to the end of July, thanks to the relatively calm weather with no excesses, and yields were starting to look quite good.
“But August was unduly wet, which began to cause some concern, particularly in the West, in Herefordshire, Shropshire, Somerset and Cornwall. The Scottish borders and up the east coast to Fife were worst hit, with excessive rainfall and the highest levels for 60 years. A lot of growers feared they were facing a repeat of last year.
“East Anglia fared a lot better, where good yields have been reported in one of the best harvests for a number of years.”
Supply has been relatively consistent over the last three months and no issues are anticipated as long as the harvest continues to go well. Imports are expected to undermine the processing market in the UK, following a good harvest on the continent, but whether supplies will meet the standards for the prepack market remains to be seen.
“Overall, we are reasonably optimistic,” says one supplier. “We are putting a degree of soft rot tubers into store and there is some concern about skin finish and, in the processing sector, low dry matter.”
But the sector is facing a number of long-term challenges, including the rising costs of fuel and fertiliser, as well as pressure on returns.
For now, one area to raise concerns has been the increasing emphasis on lesser-quality product. Retailers are focusing on discount lines, with all the major multiples concentrating on their own-brand value lines. Tesco, for example, has launched its Market Value line, while its rivals have introduced their own equivalents. “With all of this, we have seen an increase in the percentage of the discount lines,” says a supplier. “This will become a concern if it grows to too big a share of the market, because no-one makes any money on that.
“The quality of the product is benchmarked between the discounters, but it varies week to week.”
How the rest of the season will pan out is hanging in the balance, but the sector is not disheartened, even at the prospect of returns at a lower level than it would have wanted. “Prices are just about meeting requirements for a reasonable return on investment, but they have dropped to break-even levels in some cases,” says an insider. “If prices fall any further, growers will be making a loss.
“My gut feeling is that we will see a flat pricing season, but what will make the difference for us is where it flattens out,” he continues. “If prices stay where they are, it won’t be the best season, but there won’t be any broken hearts. But if they continue to drop, there will be further fallout of potato production in the UK.
“At the same time, returns for wheat and sugarbeet are so low that growers are opting for voluntary set aside, so growers who also produce potatoes will be looking to the category to make money - but that may not be such a good idea.”
The sector is confident, however, that as more consumers cut their spending and there is a move towards value-for-money meals in the home, potatoes will come into their own as a sound and reasonably priced option.
STEVENSON TAKES THE REINS
It is almost three months since I took up the post of chairman for the Potato Council and main board director of the Agriculture and Horticulture Development Board (AHDB), and since then my feet haven’t touched the ground, says Allan Stevenson of the Potato Council.
It has been a tremendously interesting time to join the Potato Council, with the industry facing a number of very different challenges on several fronts. Growers have to manage soil and water issues as climate change in the UK threatens production. They also face the global issue of increasing energy costs, which have impacted on our industry as on many others.
These challenges on a global scale have to be met within the additional constraints of regulatory burdens - especially the reduction in available pesticides. The ability to provide affordable potatoes to consumers is seriously threatened by the potential impact of changing European pesticide regulations and the Potato Council is working hard to campaign against those proposed measures.
The industry also faces the threat of an increasingly competitive marketplace, in which younger consumers in particular are being tempted to opt for alternative carbohydrates, such as rice and pasta, instead of potatoes. Much of the Potato Council’s marketing effort is directly targeted at this important group of consumers, informing them of the health and nutritional benefits of potatoes and in persuading them to make potatoes an essential part of their diet.
All this, of course, as the Potato Council itself goes through an intense period of change as it prepares to integrate within the new levy board structure following the formation of the AHDB. As part of that preparation, the Potato Council board wanted to ensure it had a strong mandate from levy payers in place to shape its strategy, guide its business plan and prioritise its programmes of activity going forward. It is vital that levy payers are - and feel - involved in this process and our recent consultation process has been hugely successful in ensuring, as an industry, we have the right focus, emphasis and approach.
As a result, I am confident that we have a very robust business plan in place to go forward under the new AHDB structure - a three-year plan, which includes marketing objectives focused on increasing the consumption of British potatoes in our core target groups. Opinion among levy payers largely suggests that our current strategic objectives are more or less on target. Certain specific marketing initiatives were highly praised and it is worth pointing these out.
The Grow Your Own Potatoes project, which has been instrumental in developing wider awareness of potatoes and their nutritional benefits among primary schoolchildren, was singled out as one of our most successful campaigns ever. Praise was also given to the extensive work done to promote the health and nutritional benefits of potatoes, which is deemed highly effective. Reinforcing these important messages will form an important part of future plans.
There were other important outcomes. For example, industry views about the value of National Chip Week were somewhat mixed, so we will review this for 2010.
On their relationship with the Potato Council, it was encouraging to note that seven out of 10 levy payers felt they had an “adequate” or “better” relationship with the Potato Council. On the other hand, 40 per cent reported that they were “not sure” that they know enough about the work that we do. That is a significant percentage and we’ll be working to address that in the future.
As a grower myself, I intend to combine my personal knowledge and experience with this valuable industry feedback to ensure that I and the whole team at the Potato Council are equipped to make sound judgements about our future strategic direction and programmes. I relish the challenge and I look forward to shaping the strategies that will enable us to best deploy levy funds to help meet the varied challenges facing our industry.
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