Volatile potato market requires deliberate choices TRADE AND MARKETING then work towards better prices. Because of short-term-thinking and inadequate information exchange among the various links, the potato sector is failing to achieve optimum financial gain. By continuing the innovation process and by entering into long-term collaboration, the players in the chain will be able to utilise the opportunities the market has to offer. Is innovation actually also an important risk management tool? ‘Absolutely. Growers who invest in modern storage techniques or precision farming are able to do better with this innovation. But they have to ask themselves what they want to achieve with their innovation. Do you want higher yields or to use fewer crop protection chemicals or both? We recommend that you focus on all the advantages. It shouldn’t be a hobby, but a business-economic investment. You should see it as a sport to ‘When a grower starts trading in future contracts, he must know how the market operates.’ get the maximum from investments in innovation. But, luckily, it’s still a matter of personal input. I sometimes say that 90 percent is determined by the man and 10 percent by the business. Suppose, I’m a potato grower and I want to invest in a storage unit for 5,000 tons of French-fries potatoes. Which potato price does the Rabobank have in mind in five years’ time when they determine my loan. ‘We prefer the entrepreneur to come with a plan himself in which he describes why this investment is necessary and tells us himself what price scenario he has in mind. How he thinks of covering any risks. It’s so much better if the grower, as a real entrepreneur, takes the lead himself and shows how he can recoup his investment. Even if the bank agrees, it still has to be commercially feasible, which means that there are questions such as: how does it affect the cost-price? How many extra yields does the grower think he can achieve? In other words, is it a good business case. That’s what it’s all about. If the grower does it himself, it’s really his plan! As a bank, we’ve stopped playing the entrepreneur. We think that the entrepreneur himself is responsible. If he has a good story, we usually quickly agree. If the entrepreneur is passive, we’re usually less enthusiastic. ● Jaap Delleman ‘In an increasingly volatile potato market – one with constantly-changing prices – it’s important for the entrepreneur to make properly-informed management choices to cover any possible risks’, says Professor Ruud Huirne. Potato World 2013 • number 4 7 Pagina 6
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