Drought: potato growers propose pan-European approach to resolve contract issues with processors

Extreme record drought and exceptional temperatures all over the main potato growing countries in Europe.
 
Not even 50 % of the North-Western potato acreage can be irrigated and in spite of the high costs irrigation pumps are working day and night.
 
But in all countries restrictions for the use of water have been imposed by regional administrations. Irrigation can be forbidden, forbidden during a few hours in the day, or the volumes of water allowed for irrigation can be decreased.
 
The irrigated fields still have growth potential. However for many fields the rain came too late.
 
After the recent rain-showers there is the threat of secondary growth, first cases are already reported.
 
Actually the potatoes have an extreme high dry matter content which can also be considered as a risk for extra damage during the upcoming harvest in extreme dry fields.
 
First trial digs
 
The first trial digs in mainland Europe show a large variation between irrigated and nonirrigated fields, for example, on average in France, for the moment, 13 to/ha brut.
 
Based upon current insights, experts expect at least 15 to 25% lower total yields compared to the long term average.
 
The coming weeks more expansive trial digs in the various mainland NEPG countries will be reported. It is too early to estimate the expected lower harvest at this moment. Due to the expected quality issues the final net yields are also hard to estimate.
 
Contracted volumes: testing the supply chain relationships
 
About 70 % of the consumption potato crop in the mainland NEPG countries is in some kind of way contracted, mainly with the processing industry.
 
Many growers report that they will probably not be able to supply the contracted volume and the question is how the buyers will react.
 
The question is if they will force growers to supply their contracted volumes, even if buying at the actual expensive free market is needed.
 
However free potatoes will be very scarce all over the NEPG area.
 
Financial losses will be considerable even if the growers manage just to fulfill their contracted volumes.
 
A spokesman of the British farmers union NFU concluded that “the extreme weather events of 2018 is out of growers control and it would take the most stone-hearted buyer not to recognize this.”
 
Estimates of the AHDB indicate the area of potatoes grown this year in Great Britain is reduced by 3%, which may exacerbate issues if yields are significantly lower.
 
The NFU has been in touch with a number of packers, processors and retailers over the last couple of months, asking how they intend to deal with yield and quality issues, and calling on them to apply flexibility and fairness when dealing with shortages.
 
Force Majeure
 
In Belgium, France and Germany the farmers unions are in discussion with the clients or have meetings in the upcoming week. Some governments are asked to declare this situation as a “nature catastrophe”, so the growers could claim Force Majeure at their clients and not been forced to supply the contracted volumes.
 
Pan European approach
 
The NEPG would regret if processors on an individual base will discuss the contract issues with their growers and the NEPG suggest an overall pan North-Western approach.
 
This dry season and climate change in general challenges the potato supply chain to reconsider the contracts and market risks for the near future.
 
The processing industry needs more potatoes every year and the risk of growing increases proportionally. Now all risks are for the account of the growers.
 
The NEPG suggests the COPA Potato Working Group of the EU to start discussions with EUROPATAT (European Potato Traders Association) and EUPPA (European Potato Processors Association)
 
Lack of seed potatoes for next year?
 
The lower overall yields are expected to also affect the yield for seed potatoes, raising a potential concern for the availability of seed potatoes for next season.