TRADE AND MARKET I NG Young Farmers programme turns out to be a golden opportunity ‘But what we also see is that, in most of the last eight years, potatoes have been sold at a level of around 20 euros’, Edwin Burgers tells current and future entrepreneurs. to ensure a takeover within the family happens in the best possible way. He advises the young farmers to start working on this at the earliest possible age. ‘Open the discussion with your father, mother and possible siblings as early as possible.’ And then, ‘Do you want to increase the acreage, would you consider a purchase if it presents itself, can an arable farm still be effectively financed these days?’ he then wonders aloud. He picks up a calculation example that initially scares you as a young farmer. With a purchase price of 80,000 euros per hectare and an actuarial interest rate of 4 percent, you pay annually 3,200 euros on interest, 2,667 euros on repayments over 30 years, and 133 euros on water authority charges and property tax. In total, an annual sum of at least 6,000 euros per hectare. Is this still possible? ‘It is,’ says Van der Velde, ‘if you spread it over the entire farm and you have almost no other financing on it, but it is a considerable burden on the financial position of the enterprise. Currently, the interest rates are low, starting from half a percent sometimes. This is attractive, but they can also go up again, which is why we use an average notional interest rate of 4%. And then again, know what your cash flow is. You must be able to calculate in advance that you can pay the annual costs with your income.’ According to the Rabo manager, to progress in income and activities, you shouldn’t just look at land acquisition. According to Joar van der Velde, good communication is the most important thing to ensure that a takeover within the family happens in the best possible way. Collaboration with neighbours, land exchange, and developing new activities can also offer excellent opportunities. Average market price above contract price And then there was market analyst Edwin Burgers of the DCA Group in Lelystad, who gave the young farmers a short lecture on the market price of ware potatoes, interspersed with new developments, as a result of the drought. What we see is that there has been a looping in recent years. What can we learn from this? ‘One day, the market goes up enormously - it’s now 30 euros, for example, - while less than a month ago it was only 3 euros. But what we also see is that in most of the last eight years, potatoes have been sold at a level of around 20 euros. He lists the causes for those years, 2010: the ‘Russia Year’, 2013: a quarter of the yield in England was not harvested, 2013: South Germany flooded, 2015: drought in Belgium, and 2016: a lot of rain in the southwest of the Netherlands. All in all, five years in which the price was well above 20 euros. Three years, 2011, 2014 and 2017 were very bad years. And there are more conclusions to be drawn, Burgers instructs the young farmers. In those past years, the average futures price of the April contract was above 14 euros and the contract prices were lower. Another lesson, according to Burgers, is that the total acreage is not decisive in the price development. ‘Whatever we grow, if it grows well you have to deal with the difficult years. If it grows badly, then you have a good price season. Both regardless of what we grow in the EU5 (France, Germany, Italy, Spain, United Kingdom). If you look at the structure of the market over the past 15 years, you can see that the industry has become more powerful in the market. But despite the fact that the industry, with its contracts, is dominant in the market, the market sometimes fluctuates even more wildly than in the past, see the example of the past 8 years. The reason is the absence of the shock absorber effect. In the 1980s, there was much more trade, which meant that the prices fluctuated less than now. There are also a number of elements to keep a close eye on when you look at the potato market and you want to be able to work out what the price is going to do,’ says Burgers to his Audience. He demonstrates this with an illustration with three eye-catching arrows. These are placed on the x-axis of a graph at three points in a timeline, showing the price trend of each trading season over the past 15 years. ‘Where the first red arrow is in week 22/23, you don’t know anything yet’, Burgers points out. ‘Only in green week 32/33 can you already see which way it’s going, up or down. That’s where the market is going to choose a direction. And viewed in this light, it’s strange that we set the contract prices in the potato market in the first weeks of Potato World 2018 • number 4 15 Pagina 14

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