Potato sector faces growing oversupply as prices collapse
There is a large surplus of factory potatoes on the market, the Belgian potato trade & processing industry association (Belgapom) warned on Tuesday. Belgian farmers currently receive just 15 euros per tonne of potatoes on the free market, a level that has persisted for months.
Between 70 and 80 per cent of the harvest has already been sold under contract at higher, fixed prices agreed months ago. Potatoes not covered by contracts, which are destined mainly for large fries producers, are now facing rock-bottom prices. Belgapom chief executive Christophe Vermeulen expects prices to fall even further in the coming weeks.
"For a year now, there has been no demand for additional potatoes beyond what has already been contracted. The factories are sufficiently covered," he said. "In previous years, exports grew steadily and extra volumes were needed, pushing prices higher. That is not the case at the moment."
The imbalance is expected to result in a sizeable surplus by the end of the storage season, Vermeulen said. Disposing of that surplus is proving difficult. Processing potatoes into biofuels or using them as animal feed are possible options, but both have limits.
The oversupply will not result in cheaper prices in supermarkets either, since the surplus only affects factory potatoes used for frozen fries. Retailers pay higher prices for other varieties, such as Bintje potatoes, which are sold directly to consumers.
Global dynamics
Elsewhere in Europe, farmers are also grappling with oversupply. The North-Western European Potato Growers (NEPG) association, which represents producers in Germany, France, Belgium and the Netherlands, has been warning of overproduction for months.
Last year’s harvest was about 10 per cent higher, while demand from major processors declined, the NEPG says. That is partly due to higher US trade tariffs, a strong euro and growing competition from producers in China, India, Egypt and Turkey.
© BELGA PHOTO ERIC LALMAND
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