A view of the market
As we look ahead to August and reflect upon months prior, challenges across the market continue to test the potato sector. Around the AKP trading desk this morning sat 90 years of collective experience, and not one of us could recall a time where we had entered August with such a tight supply situation.
Zooming out to understand this better, a potato shortage in the market has been felt across the whole of Europe. The droughts of 2022 and a cold planting season in ‘23 resulted in low yields and a delayed early crop, conspiring to create eye-watering price hikes across the continent, challenging most businesses and supply chains.
This frame of reference is essential, the pressure is felt by all, not least while witnessing prices on the farm rise too, from a free-buy trade of £140 per tonne last season to anywhere between £460 to £700 today.
Compounding this situation is a relatively strong demand in most sectors. The consumer, looking for value in the current climate, is responding to retail promotions and potatoes are overperforming in terms of volume when seasonally indexed, retail sales are absolutely on the up.
It’s the same story for processing factories across Europe too, having had another strong 12 months with the demand for French fries continuing to grow. The only sectors that appear to be struggling from a demand perspective are food service, wholesale and the fish and chip industry, largely due to significant inflationary pressures set against low consumer demand, in the midst of a cost-of-living crisis. With the majority of potato crop also being contracted, and less being planted on a speculative free-buy basis, it is expected high price volatility will be here to stay for at least the next 18 months.
Regardless, we push forward, and our attention as a group now turns to ‘23 crop marketing and plans for our ‘24 crop, which are already underway with customers and growing partners. Top of the agenda is seed, and with the likelihood of many preferred varieties in short supply, grower seed visits have already begun through our seed business, Humble Potato Company. These visits will ensure our growers and customers are covered with the right quality and varieties to fulfill and realise their ‘24 growing and marketing plans.
Reflections on the growing season
So, with the market view to guide us, how does the bigger picture inform our work in the field? To reflect upon the current season in just three words, it would have to be – wet, dry, wet! The mixed weather has certainly contributed to a demanding start, perhaps the toughest we have faced in many years. What usually takes four to five weeks to plant has taken eight, due heavy rainfall through March, April and early May.
As such, ground conditions presented a challenge at planting, with any pre-planned field sequences quickly out the window. Nonetheless, our flexible response saw us out on the road traveling to fields that had been lucky weather-wise. Although fuel prices are down from last year, our planting costs have risen slightly due to a reduced output, prolonged machinery hire and extra land work requirements to create reasonable seedbeds.
The benefit of cover crops has also stood out this year, and it is no coincidence that these fields presented the best planting conditions. Over recent years our cover cropped area has been gradually increasing, and with some tweaking of species and timings to meet the SFI requirements, we are keen for this trend to continue.
In keeping with the unpredictability of British summer time, the pouring rain throughout planting soon turned to irrigation. A very dry June and early July meant our time was heavily consumed by pumps, reels and pipes. Thankfully, our continued investment in drip irrigation paid off here, enabling us to maximise water availability to the crop when it was needed most. .
Yet again, the weather pattern began to change during mid-July. The cooler temperatures and heavy rainfall across our growing area meant that most fields under our control recorded 120 to 150 millimeters of rain for the month of July. Fortunately, the rains have improved prospects for our Lincolnshire and Yorkshire crops, compensating for the poorer yields in the very south of the country. While some of our earlier varieties are a couple of weeks behind where we would expect, the yield potential of our main crop appears to be good. Now, all we need is some warmer weather in August to maximise potential!
Bringing us to August, our focus now lies with crop monitoring and yield digging to help inform our harvest, haulage, and storage plans. This week saw the last of the 2022 crop leave our stores, just in time for boxes to be sanitised and stores maintained ahead of the new crop landing. And once the first of our ware crop is flailed and desiccated in a couple of weeks’ time, the countdown to harvest is well and truly on!
Partnering our understanding of the UK and European potato market with on-the-ground, proven farming techniques tested and refined over generations helps us to mitigate the risk in the supply chain. This is how we intend to keep our customer, grower and own production sustainable into next year and beyond, despite the backdrop of a challenging market place all around. Through collaboration and partnership we always find a way through, embracing the challenge with skill, to grow better together.