OVERVIEW GLOBAL POTATO MARKET

The potato yields in the Netherlands seem to be falling sharply. The quality problems also entail challenges. For many open ground plots, the rain came too late after the long period of dry weather. Consequently, producers hope for good prices. After some fluctuations in the first period of August, the prices on delivery for potatoes for frying have steadily risen above 30 Euro per 100 kilos this past week.

"The results of the test harvests of Bintje and Fontane are dramatic this year," says a Belgian grower and trader. Many growers had never recorded such a low yield. This is the fifth year in a row that the climate has a negative impact on the production, but there was always something that saved the harvest. This year is the exception. The price now stands at around 25 Euro and is not expected to go down until June next year. During the storage period in September/October there will likely be some pressure on the price, because there will be more supply to try taking advantage of those nice prices.

In addition to the low harvest, the weather has caused a lot of second growth. "Many people will have potatoes which may not be worth keeping. I am also afraid of eventual shortages. The requirements are much stricter than they used to be, and the industry will also have a hard time. I really don't think that processors will have enough potatoes until next June. They will continue operating, but not at 100% of their capacity," said a trader.

Two seasons ago, many growers also had a smaller harvest, but then there were alternatives from Germany and Poland. "This year, there are no such alternatives, and when I speak to my German colleagues, their prospects also appear gloomy. There are no alternatives in Europe this year, and if the processors have to find solutions, they may have to buy processed products. It will be very difficult," he says.

Due to the dry weather, the French production volumes have decreased considerably. Fortunately, sufficient volumes are still available for the time being. "Because of the limited harvest, things are going very well on the market," says a trader. He expects sufficient demand for French potatoes throughout the year. At the moment, not much is exported, as most European production countries still have enough potatoes available, but this will soon change. "Almost all of Europe has recorded small harvests and quality problems, so as long as we have enough supply available, the demand will be good."

In the most important cultivation areas, the dry weather has taken a toll on the potato production. At the national level, the potato organization BOGK has already predicted a 25 percent reduction compared to the average. It should also be noted that the differences between the various growing areas are significant. While prospects in Thuringia already point to a 50 percent drop in the harvest, in Bavaria the total volume will only fall slightly below average. Despite the weather issues, the domestic product still currently dominates the wholesale market and there is a multitude of potato varieties. In addition to standard varieties like the Anabelle and Marabel, there are others such as the Columba and Elfe which are also common in German wholesale trade. Although there are small differences between individual wholesale markets, there is an overall shortage of large calibres. As a result, the current market has been characterised by large potatoes reaching high prices since the beginning of the season.

In Austria, too, the yield per hectare is clearly below the level of recent years. In the growing areas in Lower Austria, 18 Euro per 100 kg were paid up until a few days ago. For the large calibres, the purchase price oscillated between 15 and 18 Euro. In Central and Upper Austria, the prices have been even higher, ranging between 20 and 22 Euro per 100 kg.

The weather has not been favourable for the growers in Castile-Leon, the largest potato cultivation area in the country. The region accounts for 40% of the Spanish potato harvest. This year, the yield is lower, more small sizes are available and more problems are reported. Nevertheless, the market remains stable.

After the dry winter, the greatest concern at the beginning of the planting period was whether enough water would be available; however, a period with abundant rain followed and the planting was delayed. The potatoes were planted at the end of May. Rain, dry weather and storms followed one another, causing fungi to appear and sizes to remain small. The prices are satisfactory, mostly thanks to the smaller yield.

In April, the season kicks off with the harvests in Murcia and Andalusia. Later, in July, follows Castile-Leon, where the harvest continues until November. Then it is time for the second crops from Spain and imports from Israel, France and Morocco.

In general, the prospects are good for the Italian potato sector. Due to the weather conditions, the planting in Emilia-Romagna, Lazio and Abruzzo was delated by 15 to 30 days, and for this season, the harvest has not yet been completed. Compared to the previous season, the yield is lower. Italian potatoes currently cost between 0.27 and 0.30 Euro per kilo, which is a higher price than in 2017. Prices are expected to remain stable, although a slight increase can be expected due to the need to recover the storage costs.

In Emilia-Romagna, one of the largest production areas in the country, the 2018 season is considered good. Despite the delay in the planting due to the weather, which also had an impact on the yield and quality, the late varieties have recovered well and these varieties have compensated for the lower yields of the early varieties. In general, therefore, the sector talks of a good harvest. "Despite the extreme weather recorded this season, we are satisfied with the yield from the varieties we are testing in the Italian regions," says a trader. "In addition to the good performance of the Agata, Colomba and Vivaldi, we have achieved excellent results with the new Constance, Orlena, Gaudi and Monique.

The export season came to an end more than a month ago, so the results have already been assessed. Following the trend of the past two years, the sector has closed a mediocre season, despite a small increase in both the total production and exports.

Last year, 600,000 tonnes of potatoes were harvested, 220,000 of which were exported. The biggest buyer of these potatoes is Europe. The figures for this season are still being collected, but it is expected that both production and exports will have increased by no more than 5 to 10%.

Exports are fully concentrated in the months of March to June. Israeli potatoes have a good position in the market in this period, as the European production from storage is less appreciated. Despite the good reputation of the fresh potatoes, the price is erratic and relies on the supply and quality of both local and Israeli potatoes. European importers prefer local production when available and the improvements in storage capacity in Europe, combined with a growing acreage, results in a shrinking market for Israeli exporters.

Due to the negative price trend and the stagnating demand in Europe, the acreage in Israel is under pressure. The focus of the growers is shifting more towards the domestic market. In order to secure the export, investments have been made in other varieties that meet the requirements of European customers. Varieties that were chosen in the past due to their good performance in the Israeli climate must now be replaced for varieties that are more marketable and therefore have a higher demand.

There is a lively mood on the South African potato market. Consumers spend around 1 billion rand (58 million Euro) more on potatoes every year than they did ten years ago. The average consumption is now around 40 kilos per capita. Last year, the volume of potatoes sold was 1% greater than in 2015, when the latest record figure was reached, but at a price that is 21% higher, even if inflation is taken into account.

The biggest challenge is the rising transport costs. These rates have increased due to changes in legislation. There are also concerns because of the lower availability of trucks, with all that this entails.

Thanks to the different varieties planted and the many cultivation areas, there is a year-round supply of potatoes in Australia. Some growers in New South Wales talk about "challenges" during the winter months in the southern hemisphere due to frost and dry weather. This won't only have an impact on this year's harvest, but due to the limited resources for irrigation, the harvest could also be affected in the future. Growers are hoping for more rain during the spring. Meanwhile, seedlings from South Australia and Victoria gained access to Indonesia earlier this year.

According to Hort Innovation, the harvest for the year ending in June 2017 stood at 1,333,418 tonnes, 65% of which was intended for the processing industry. This production was worth a total of 717 million dollars, which is 9% more than in the previous year. Australia exported 34,782 tonnes. South Korea is the largest buyer.

In December 2017, the total value of the potato sector, including the domestic market and exports, stood at 982 million dollars. That is 27% more than in 2013. In 2017, 129.3 million dollars' worth of potatoes were exported. The largest share (91.6 million dollars) corresponded to frozen potatoes. The value of fresh potato exports amounted to $ 29.5 million.