TRADE AND MARKET I NG Ensuring the price is right Chart 3. Belgian potato production and price 3,5 4 2,5 3 1,5 2 0,5 1 0 2009 2010 2011 2012 Belgium potato production in million tonnes 2013 2014 2015f Belgapom following June price 2010=100 100 150 200 250 300 350 400 50 0 The price and production link There is a lot less correlation between Chart 4. Great Britain potato production and price 0 1 2 3 4 5 6 7 2009 2010 2011 2012 GB potato production in million tonnes 2013 2014 2015f AHDB following June price 2010=100 100 150 200 250 50 0 the June 2010 value. Contrast that with Belgium prices from its potato organisation Belgapom. In two years since 2010 average June prices have been more than 300% of the June 2010 price, while in two other years prices have been significantly below 100% of the 2010 value tumbling to less than a quarter in June 2015. That volatility is some of the most pronounced of any commodity in any agricultural market sector. The Belgian industry has recognised this and has introduced more contracts with industry bodies estimating that around 55% of the crop is now contracted compared to as little as 20% 10 years ago. In the 2015/16 season Belgapom estimates that the contract price for its Bintje processing variety ranged from €90/tonne in September 2015 to €140/tonne in July 2016. That compares with a free-buy range of €90 to €200/tonne. In previous seasons prices have reached highs of €350/tonne but in others lows of just €15/tonne. The chart also shows average British prices from 2010 onwards from the UK’s Agricultural & Horticultural Development Board. They include a mix of contract and free-buy values. The British market is a bit of a halfway house between the USA and Belgium. It uses contracts more extensively than Belgium – in the case of major processors it is as much as 90% of supply. But there is still a significant volume of potatoes traded on a free-buy open market basis. That halfway house is reflected in the figures where the range of values is much greater than the US but a lot less than Belgium. In no years since 2010 have values been less than that year, but in 2013 they were double the 2010 value. prices and production in the USA than there is in Europe. In the seven seasons between 2009 and 2015 average US autumn potato production has been 17.619 million tonnes in a range from 16.202 tonnes in 2011 to 18.526 million tonnes the year after, a range or 12.7% (Chart 2). But in the June following the small 2011 harvest prices were actually at their lowest for all the seven seasons. In Belgium average production over the seven seasons has been 3.108 million tonnes in a range of 2.448 million tonnes in 2012 to 3.702 million tonnes in 2014, a difference of 51.2% (Chart 3). That is reflected in the prices. So in June 2013 prices had soared to 323% of their June 2010 value, but in June 2015 they had plunged following the record 2014 harvest. In Britain there has been a trend of falling production since 2009 with average production of 5.625 million tonnes over the seven seasons according to AHDB figures (Chart 4). That includes a range from 6.192 million tonnes in 2009 to 4.494 million tonnes in 2012, a difference of 37.8%. Prices track the change in production quite closely with values at their lowest in June 2010 and their highest in June 2013. The price stability in the USA has allowed its industry to maintain production and satisfy most domestic and export needs. However, that lack of price stability has not dissuaded the Belgian industry to increase its output of both potatoes and potato products that are exported around the world. Cedric Porter WORLD POTATO MARKETS World Potato Markets provides the most in-depth weekly analysis of the global potato market available. For more information contact Cedric Porter at cedric. porter@agrimarkets.net or telephone +44 1892 543444. Also see www.worldpotaotmarkets.com Potato World 2016 • number 3 33 Million tonnes Million tonnes Price. 2010=100 Pi 2010100 Pagina 32
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