The UK Potato Market - A Farmer's View
March 2008
Last year's potato growing season continues to create problems for the whole of the potato market. Quality issues mean that the usual two-tier market is more pronounced than ever. Good stocks are in demand and steadily increasing in value whereas poor quality stocks are difficult to move and, in some cases, falling in value.
This year at Farmhouse there have been periods when our suppliers have found it difficult to source baking potatoes that are of a good enough quality. Whenever that happens our level of rejections tends to increase. This is because the suppliers try to use poor quality stocks to meet our orders. A week later we can suddenly have ample supplies of good quality available. This fluctuation in supply has been more pronounced since Christmas and probably reflects two important factors in the marketplace.
The first is that the weather affects supply and demand in a number of ways. A cold spell can encourage consumers to turn more to hot meals and away from salads and therefore use more potatoes. Furthermore, if it is very cold, as it has been recently, farmers will not open stores in case of frost damage. At the same time our suppliers have to be very careful to ensure they warm batches of potatoes before they begin to wash, grade and pack because cold tubers are very prone to bruising damage. We occasionally receive deliveries which look good on arrival but within a few hours severe internal bruising begins to develop. Inexperienced growers or merchants can very quickly waste good quality stocks in this way.
Conversely, warmer periods can mean less demand and batches of potatoes are easier to handle and therefore there is less pressure on the market. Furthermore, if the weather becomes warmer still as spring progresses, it can encourage farmers who are holding stocks of potatoes in ambient stores to offer more onto the market. This is because as an ambient store rises in temperature there is more likelihood of tubers beginning to change internally; starches begin to change into sugars and the tuber begins to send out sprouts. If the potatoes are not used quickly the quality deteriorates and at the same time the tubers lose weight as they sprout more and more.
The second major factor is that, according to the British Potato Council's figures, current stock levels are some 14% lower than last year and that, you may remember, was also a high priced year with stock shortages. This is of great concern because it seems that consumption is similar to last year suggesting an even greater shortage as the season progresses. Usually, when potato prices remain high, demand falls as consumers turn to rice or pasta but then almost all commodities have risen in price so perhaps that is no longer the case.
One feature of this season is that in Europe overall there is a surplus of potatoes due mainly to the lack of export demand. As a result, prices in mainland Europe are lower than here in the UK. Most of the varieties are unsuitable for our fresh market or for baking potatoes but there are some acceptable stocks and a considerable volume is being imported, particularly from France. By the time they are transported into the UK they are no less expensive than the home grown stocks but they do help to keep the market from rising at an even higher rate. Here at Farmhouse we are very limited in the volume of imports that we can use because for many customers and products we are committed to only use British grown potatoes.
Over the next few months we are expecting prices of good stocks to increase even further but the severity of the rise will depend mainly on the quality of the remaining stocks held in stores. Other factors will be the ongoing availability of the imports and the level of consumption which, in turn, often depends on the weather. I have not heard of anyone in the trade who thinks prices of good quality stocks with a high baker content will fall before the start of the second early new crop. This usually begins to have an affect in late August or early September. Prices at that time will depend on the growing season which we all hope to be better than the last one.
Looking further ahead, it might be that high prices will become the norm. Prices of cereals and oilseeds have more than doubled in the last year and since a large proportion of the potatoes grown are on land let out on an annual basis to specialist potato growers by arable farmers who are geared up for combinable crops, there may be a reduction in land available. Some farmers may decide to grow more oilseed rape as a break crop rather than offering the land to potato growers. The forecast for this year is that there will be a similar area planted compared to the last few years but the change in fortunes of the cereal and oilseed growers may have a greater effect in the future.
Rob Bannister
Robert Bannister ©2007
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Traditionally Baked Potatoes