CU LTIVATION AND TECHNOLOGY European drought could have a ripple-effect around the world in product prices is the price of fry exports. In the past year European fry export prices have drifted downwards by around 4.0% in the year ending June 2018 partly in response to lower potato prices. That contrasted with a 4.0% increase in price between June 2016 and June 2017, following a doubling of the potato price after a small 2016 harvest. Shift in global competitiveness The competitiveness of European fries has led to record export levels with the 28 members of the union shipping 1.669 million tonnes of product in the year ending June 2018, 16% higher than the previous 12-months, with that volume dominated by shipments from Belgium, the Netherlands, France and Germany. The expected rise in the average European fry export may erode some of the price difference between European and North American fry prices, making European suppliers less competitive. That process has already begun, with the price premium for US product down from US$303/tonne in the year ending June 2017 to US$263/tonne. The premium for Canadian product over European fell from US$123/tonne in the year ending June 2017 to US$94/tonne in the following year. US, EU & Canadian fry export prices in /tonne in the year ending June 200 400 600 800 1000 1200 0 2007 2008 2009 2010 US fry export /tonne 2011 2012 2013 Canada export /tonne 2014 2015 2016 2017 EU fry export /tonne 2018 US, Belgium, Germany & Netherlands potato end-of-year potato prices 100 150 200 250 300 50 0 2007 2008 2009 US US$/tonne (USDA) 2010 2011 2012 2013 Belgium /tonne (Belgapom) 2014 2015 2016 Netherlands /t (NAO) 2017 2018 *Sep Germany (AMI) Long-term resilience questioned The European drought has prompted its potato industry to ask some fundamental questions about its resilience. Growers with irrigation systems were protected from the lack of rainfall, with many delivering reasonable yields of quality potatoes. Those without irrigation saw yields struggle to 20 tonnes/hectare, with many potatoes showing signs of secondary-growth in response to some rainfall after very dry periods. The potato industry will be looking to support from Governments to help fund irrigation systems and allow the extraction of water. The drought has also raised questions about the European contract system. Growers in the 2016/17 season with with contracts were protected from very low prices, but will miss out on some very high free-market prices this season and some will not be able to meet their contract commitments without buying in freemarket stocks. A system that allows more security of supply and less fluctuation in free-market prices could help growers invest in production and processors operate with more certainty, but devising such a system will be challenging. ● Cedric Porter is co-editor of World Potato Markets, a weekly global market briefing providing insight on prices, production and trade. www.worldpotatomarkets.com Potato World 2018 • number 3 19 Pagina 18
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