Results of 2019/2020 campaign and concerns about difficult potato season in 2021

09.11.2020 196 views
On Thursday November 4, 2020, the UNPT held a video conference in which Geoffroy d'Evry, UNPT President, Martin Mascre, UNPT Director, Bertrand Achte, UNPT Vice-President and Transformation Commission Chair, and Olivier Brasset, UNPT Vice-President and chairman of the Starch Committee, presented the results of the 2019-2020 season and some of the prospects for the 2020-2021 campaign. The impact of the coronavirus crisis on the markets, the current government support measures, as well as the discontinuation of the CIPC and the initiated transitions were some of the topics addressed. 2020-2021 campaign: identical in many respects to that of 2019-2020 The 2020 season is very similar to that of 2019 in terms of the planting, the growing periods in the spring and summer and the harvesting conditions. Just like the previous one, this season has also been marked by drought during the cultivation, dry conditions before the start of the harvest until mid-September and periods of rain from the end of September / early October. This slowed the harvest down. Currently, just over 20% of the potatoes still have to be harvested. This season will certainly be affected by the second wave of the coronavirus, while the previous one, in March, took place at the time of the first lockdown and the period when the first effects of the pandemic were felt. Starch As far as starch is concerned, the surfaces have increased significantly in the past year. In terms of yield, barely a million tons has been reached. Over the past 5 years (with an average yield of 42 tons), the yields have fallen clearly below those of the 5 previous years (average 52 tons). These decreases of about 20%, measured over a period of 10 years, are mainly due to periods of extreme heat and periods of drought. Increase in the acreage The development of the acreage over the past 5 years is mainly linked to the development of the demand from the industry, which has increased. The acreage has significantly expanded in the past five seasons, especially in France and Germany. Whether this trend will continue has been uncertain since the lockdown in March. Although the acreage continued to expand in early 2020, once the pandemic started, it was difficult to adapt, as rotations were already underway, the plants had already been ordered and the season had already started. Revenue estimates Although the figures at the end of the harvest are adjusted in order to determine the actual yields, we can already say that the 5 European countries will reach about 28 million tons, versus 26.8 million in 2019 and 25 million in 2018. With a yield of 28 million tons, the cultivation results of these 5 European countries would have fallen into balance without the influence of the coronavirus. In 2020, the yields are more in line with the average of all European countries. They are more homogeneous. In 2019, the Eastern countries and Germany recorded lower yields compared to the averages. This created the opportunity to export a number of products to these countries and to round off the 2019-2020 season well. The impact of the pandemic: falling prices in the industrial potato market In the 2019-2020 season, the price of industrial potatoes fell sharply since the lockdown in mid-March, down to 20-25 Euro per ton. No more purchases took place, as manufacturers already had their needs covered and with their existing contracts they were even dealing with a surplus of potatoes. Effects of the pandemic on the fresh market: a limited impact on prices in France During the 2019-2020 season, the lockdown stimulated consumption enormously after a not very active market in February. This led to France's home consumption of potatoes increasing by 7%. Price levels were quite high (but obviously lower than those of 2018, when a severe potato shortage led to higher prices). After that, prices managed to recover and stayed at a good level. That good level could be maintained, because the impact of the coronavirus on prices in the French fresh sector was limited. The impact of the coronavirus on export prices was also limited for high quality potatoes; however, there has been a decrease in the price of potatoes of average quality or lower than top quality since April. This fall in prices is mainly due to the arrival of industrial potatoes on the market. For the 2020-2021 season, the prices stand at a much lower level than those recorded during the previous season. Conclusions regarding the impact of the coronavirus crisis The coronavirus crisis has hugely disrupted the market. There has been no market for the potatoes, so considerable quantities had to be processed into animal feed, raw material for biogas or compost. About 1,200 to 1,300 tons have been donated. At the moment, the coronavirus is keeping the rate of processing factories down by about 15 to 20%, and this was already so before the recent announcements of a possible new lockdown. At the moment, there are serious doubts at the industrial level with regard to the development of potato consumption and thus also of the batches that will be necessary for the industry. There are clear fears of ending up in a situation similar to that of 2020. On the one hand, the stock of finished products in France is not necessarily higher than usual, because France is not a country with a great presence in the export markets. On the other hand, it seems that there are significant volumes of end products in Belgium, which are likely to have an even greater impact on processing and the batches intended for these Belgian factories. Faced with these difficulties and the enormous impact that the coronavirus has had on the industry, the industry is very much hoping to get financial support from the state in the near future. Temporary financial aid plan still under development Last June, the state announced that it would offer financial support (an amount of 10 million Euro in total) to growers of industrial potatoes. So far, however, nothing has been paid yet, as discussions regarding the financing plan are still ongoing. Nevertheless, there appears to be a version of the plan that would provide EUR 4 million in direct aid to growers. With regard to the remaining 6 million, the Government has said that, in any case, the aid is not intended to be paid to manufacturers. Given this, what the UNPT fears is that failure to provide support to manufacturers will have major consequences for the next season's contracts. The manufacturers could try to receive this financial support, which they are not receiving directly from the state, through the growers. Still, during this difficult period, all growers' contracts were respected, despite the stagnation in the demand, but the batches of potatoes were processed into animal feed or transformed into raw material for biogas. This situation could undermine all the work, especially after the adoption of the Egalim law, which was intended to stabilize commercial relations between the growers and the different links in the chain. Furthermore, the UNPT fears that the state will allocate this remaining EUR 6 million that has been promised to structural support linked to investment and therefore to the recovery plan (optimization of storage buildings, upgrading following the stopping the CIPC, which entails significant additional cost for producers, development of agroecology, energy optimization of buildings, etc.). However, the UNPT is firm on this point: it does not want the different payments to be mixed up. Acreages must be adapted to the needs of the various industries The UNPT's position on the development of the acreage is quite clear: cultivation must be adaptable to the needs of manufacturers. So: the sooner there is insight into the needs of manufacturers, the faster the growers can adapt their acreages to those needs. Given the situation, which is causing difficulties within the sector, there is some concern among some players within the sector, especially in Belgium. The question is whether they will be able to recover from a second coronavirus wave. The growers run the risk of managing to sign fewer contracts with the manufacturers. It is therefore important for the UNPT to encourage growers to take action and reduce their acreages significantly (ie by 15% in total). According to the UNPT, it is better to have a smaller contract with a decent price than to hold a large contract with extremely low prices well below production costs. In any case, the productions had increased after the growers stopped using certain agents, such as CIPC sprout inhibitors. It is therefore absolutely essential for the UNPT that these extra costs are included in the contracts of 2021. Concerns about the 2020-2021 season The sector remains uncertain due to the coronavirus crisis. There is no doubt that the second wave will be different from the first, but it is also certain that it will have a significant impact on the market. The situation is alarming, given the relatively high yield this season, while sales are low due to the continuing decline in consumption. Each market has its own destinations and the industrial market should not disrupt the fresh market, which has so far remained in balance and could be hindered by the arrival of industrial potatoes. Although it is still too early to say, there is a chance that batches of industrial potatoes will again have to be processed into animal feed or used as raw material for biogas. In such a case, will there be another form of financial support? Also, the discontinuation of the use of CIPC in favor of a new agent called Dormir puts the possibility of transferring batches from industrial potatoes to animal feed into question. Currently, it is forbidden in France to process potatoes treated with this new product into animal feed. In view of this: if there are industrial potatoes  left over again this year, where will they go? Faced with these uncertainties, the UNPT is calling on growers to take charge and avoid the impact of the situation by controlling their areas. After all, it is better to be prepared for what is going to happen in the market than to wait for the consequences. Source - https://www.freshplaza.com
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