The last 12 months have had their ups and downs for the potato category, with heavy rain and floods in June and July marking the lowest point for UK potato growers, sparking a range of issues and hitting both the volumes and quality of available product.
So now, just a month into the New Year, and with the first plantings for the new season already in the ground in Cornwall, the sector is holding its breath for what the year could bring. But in the mean time, the UK supply chain is being torn by high prices at the farm gate and price pressures from retailers, putting suppliers in a very tight spot.
“It has been a mixed picture for the UK sector this season, what with the conditions we have had, and this has affected the whole industry,” says an insider. “High wastage levels have affected much of the sector, but growers with high-quality or large-sized crops have enjoyed good returns, while the multiples have stepped up their price war.”
UK-grown stocks in store appear to be generally in good condition. However, there is still variation in quality, with small-sized or bruised crops still on farms.
The run-up to Christmas got off to a promising start for UK growers, with demand higher than anticipated and returns inching upwards, especially for best product. Producers requested higher prices throughout the festive period, particularly for bold Estima and high-quality Maris Piper, but only top-notch product really ended up making more money.
“Most buyers were keen to ensure supplies at an early stage, and volumes were good, as expected,” says one market analyst. “But this meant that, once they had stocked up, January was a quieter period in the market.”
Suppliers have had a rougher ride and, with mounting price pressures from the major retailers as they near the end of their trading year, many have fallen well short of their targets. “The cost pressure from the retailers is severe, and we have delivered big volumes this quarter, without profit,” says one supplier. “Prices before Christmas were not where they needed to be, because the supermarkets were making up their own shortfall across the whole of the fresh produce department by nicking our profits to plug their gaps. That comes with the power the multiples have - they are prepared to screw our budget to make sure they hit theirs.”
But these far-reaching frustrations have not deterred UK suppliers from sitting tight and crossing their fingers for longer term gains. “Margins will remain extremely tight, if they even exist at all,” says a supplier. “But we hope that the pressure will ease off when the retailers reach the end of their trading year.”
UK suppliers are trying their utmost to work the market as best they can. “The quality of the crop has not changed, and is where we expected it to be,” says a supplier. “We are trying our best to promote the lines in which we have the volumes to do this. Any gaps that we have had are closing and, if they continue to close at this rate, soon there won’t be any. But growers have been holding back their crop for higher prices, and I expect there will be tonnages that have not yet been committed, and are yet to come out of stores.”
Imports were stepped up a gear after New Year to equalise the balance between supply and demand, with a steadying effect on the market. A “typical January trade” has since seen prices for quality unchanged.
More imported product - both maincrop and new season - is expected to arrive on the UK market in the next few weeks, with ware crop coming from France, Belgium and the Netherlands, and earlies from Israel and Egypt.
Imports of ware crop for the year to mid-January increased notably, reaching 68,500 tonnes, up from 48,300t by this time last year. The market for imported earlies is more or less in line with last year, with sendings reaching 11,500t this year, in comparison to 13,000t by this time in 2007. The influx of potatoes from outside the UK is expected to pick up in the next quarter, ahead of the start of 2008 home-grown supply.
Israel has suffered one of its worst frosts in living memory, with temperatures dropping to -5ºC, sparking fears for the potato crop. “We are not expecting any impact on supplies to the UK in the short to medium term,” says one importer. “But there could be some issues later in the season.”
The first significant volumes of Israeli potatoes will hit in the UK in the next few weeks, in line with last season.
The first arrivals of Egyptian Nicola hit the UK market on January 12, with regular shipments of Egyptian product expected until the end of April, with a peak in March.
Production was smooth sailing until the country was hit by cooler temperatures and frost three weeks ago but, while this could have an impact on volumes, it is not expected to affect quality. Some 23,000t are forecast for export from Egypt to the UK this season, up from 20,000t last year.
The Egyptian share of the new potato market is growing and, now that the country has been clean of brown rot for a few years, UK importers are gaining confidence in the product. “We are determined to regain our market share in the UK,” says one Egyptian exporter. “Prices have certainly been higher this year, which has been good news for Egyptian growers. The market is competitive and we are up against stored crop from the UK and Europe, but fresh new potatoes that come out of the ground in January and February are still worth something.”
Preparations are already underway for the 2008 UK season, before the race for the early market gets into full swing. A number of growers in Cornwall made a start on early planting before Christmas and, by mid to late December, around three hectares had been completed. Dry soil and weather conditions after New Year initially spurred on growers in the region, but progress was halted by heavy rain and storms in January. It is still early days for the next season, and only around 24-30ha have been planted so far, in line with this time last year. Planting will start in Pembrokeshire, Kent and Cheshire when the weather dries up sufficiently, in February. The rest of the UK will follow in March.
Recent bouts of heavy rain in areas that were hit by floods back in July will top up reservoirs for irrigation, ready for when it will be needed later in the year.
“How the next few months will pan out - in terms of preparations for the new season - very much depends on the weather,” says an insider. “Conditions will need to dry out in February if we are to have a good plant in March but, until the new UK season starts, imports will continue to cover the market.”
PESTICIDE PROBLEMS LOOMING
New pesticide legislation working its way through the European parliamentary system could have serious implications for the potato sector, warns Dr Bill Lankford, potato crop protection manager at Bayer CropScience.
The proposed legislation includes a new Sustainable Use Directive and significant changes to the regulation of pesticide approvals. Whilst the Sustainable Use Directive would essentially bring the rest of Europe up to the same high standards already being practised in the UK as a result of the Voluntary Initiative, the new criteria proposed for pesticide approval should be of great concern to everyone in our industry.
If this legislation were to go ahead in its current form, between 50 per cent and 75 per cent of pesticides currently in use would be lost, including many recently introduced treatments that have been subjected to rigorous scientific scrutiny for their efficacy and safety to man and the environment. It is an outcome that could seriously compromise European growers’ ability to meet demand.
So what can be done? Obviously, the political process has to be influenced but, whatever the end result, it is clear that manufacturers of crop protection products will have to put even more effort into new product development. Pesticide legislation will inevitably tighten, but the question is to what degree?
Innovation has always been the mission of R&D-based companies like Bayer CropScience, and the challenge of equipping growers with the widest possible choice of crop protection solutions is one we continue to meet. In the last two years, we have introduced four new products designed specifically for potato growers. In 2006, we launched Infinito, a new potato blight fungicide, and Biscaya, a new insecticide to control aphids that have developed resistance to other chemistry.
Apart from setting new standards in efficacy, these products were developed to meet the needs of all the food chain’s stakeholders, for operator, environmental and consumer safety. With Infinito, growers can also adjust application rate and spray interval according to disease pressure, in line with the integrated pest management (IPM) principles that are a key part of sustainable pesticide use.
One of the problems that 2007’s wet conditions presented growers was incredibly high slug populations. They also had to cope with the introduction of new rules on agricultural waste, including pesticide packaging. We were able to help them tackle both with the introduction of Draza forte - a new, more concentrated slug pellet delivered in ‘bag-in-box’ packaging that can be disposed of as non-hazardous waste.
As the EU has worked through the Annex 1 review of pesticide approvals, potato growers have suffered a significant reduction in treatment options. Late in 2007, they lost Paraquat, which had long been a core constituent of weed control programmes. Anticipating this development, we were able to have Basta, a new herbicide solution, ready for the 2008 growing season.
The increasingly demanding environment in which growers work requires more than just product innovation, though. Today’s spray operators have to be highly trained specialists, products need to be applied with precision, and pesticide use has to be justified. We help growers to face these challenges by running operator-training programmes, investing in application technology and providing IPM-based decision support services, like Slugwatch UK (accessible via www.bayercropscience.co.uk).
Whilst the EU’s new pesticide legislation is not due to be implemented until 2011, it is something the UK potato industry needs to be aware of and attempt to influence now. We can only hope that good sense will prevail, because if it does not, it is unlikely that growers will be able to continue producing not just the quantity, but also the quality of produce demanded by consumers.
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