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What
is the "right" price for potatoes for processing?
In the classic model price is determined by supply and
demand.
Several models exist.
 But
the reality is even more complex. First of all, a major part of the potatoes for processing are sold
based on contracts resulting from sometimes tough and
lengthy negotiations between potato processors and farmer
representatives. (estimates
by processor in NL, B). Furthermore, farmers
organizations attempt to control the potato supply, a
strategy that was recently quite successfully executed in
North America by the United Potato Growers of North America
and there are indications this approach is being "exported" to Europe.
Recently we see two new developments impacting potato
pricing:
Indexing
Resources for Potato Prices:
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A rather new phenomenon is to agree a contract price that
is indexed for a number of key input costs for the farmer.
In times where we see huge and sudden fluctuations in costs
of oil and fertilizer, this makes a lot of sense and can at
least protect the profitability for the farmers.
Vertical chain integration
What is vertical chain integration? The extreme version
in potato processing would be a company growing their own
potatoes, processing them into French fries and selling them
in their own QSR chain. Well, I don’t think we will ever see
the potato processors in the the foodservice industry. But
growing their own potatoes?
The first time I asked myself if vertical chain
integration would be an option for potato processors was a
year ago,
when Conagra
Foods Lamb Weston bought Watts Brothers, a processor
and grower of vegetables.
Today, Simplot is probably the company with the most extensive
growing operations. However, recently
Lamb Weston is creating potato growing Joint ventures in the Pacific
North West. In my opinion, this type of Joint ventures could very well become a significant “third
option” of acquiring potatoes for processing: it provides
the processor an opportunity for increased control over how potatoes are grown,
what potatoes are grown (think about introduction of
proprietary varieties!), logistical control and opportunities to
tweak and optimize potato cultivation for processing without
the need to communicate that knowledge to all supplying
farmers. A tight potato supply resulting from supply
management by potato grower organisations adds a financial incentive.
Having said that, I can only see it as part of (very)
large scale operations such as exist in the Pacific North
West. I don’t expect to see this in Europe.
So what will harvest 2009 bring?
Prices have been
negotiated (and
renegotiated) in the
pacific north west and some negotiations are still under way
at other locations. Volume for table potatoes in retail is
likely to go up. Much will depend on the final volumes
required by the potato processing industry. And although the
(US) dehy sector shows weakness (see next Newsletter), I am more
optimistic about the frozen potato sector after I read
Conagra Foods (Lamb Weston) 3Q report: Although we heard
worrying remarks from Lamb
Weston about the markets
for frozen potato products early January , the
3Q figures
seem to indicate that business in the period December - February
2009 was not so bad
after all.
Enjoy reading,
Paul van Eijck
Please take note of the fact that we recently added three
auctions for processing equipment, mainly for snack food
processing.
More Events...
Agricultural Products: Global Industry Guide
Datamonitor's Agricultural Products: Global Industry Guide
is an essential resource for top-level data and analysis
covering the agricultural products industry. It includes
detailed data on market size and segmentation, textual
analysis of the key trends and competitive landscape, and
profiles of the leading companies. This incisive report
provides expert analysis on a global, regional and country
basis.
More Market
Research Reports
 The
international potato industry
The international potato industry provides the most
comprehensive picture yet available of the dynamics and
structure of the global potato market at the beginning of
the 21st century, and will be essential reading for all
those new to or already involved in the potato and ancillary
industries worldwide as well as for agricultural economists,
fresh produce brokers and traders and national and
international economic planning agencies.
Read more...
More Books
A self-testing kit to measure potato glucose content
Sugar content plays an essential part in the culinary and
technological quality of potato tubers. It also depends on
variety, maturity at harvesting and storage conditions. This
simple kit can provide valuable management information.
- For on-the-spot evaluation of optimal harvesting
dates for potatoes destined to become crisps or French
fries.
- Harvest times, storage temperatures and potato
handling can all be planned to ensure the highest
quality.
- Easy-to-use kit, requires no special training to
use. Each test uses at least 20 potato tubers,
representative of the bulk to be tested.
Read more...
More
products
French Fries and Potato Specialties
Chips and Snacks
Dehydrated Potato Products
Potato Starch
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Processing Equipment
Potato Supply Chain
QSR Restaurants
Health and Nutrition
Energy and Environment
Food Trends
Ecofrost NV
Ecofrost NV is a young Belgian company,
situated in Peruwelz, specializing in the production of
frozen potato products, mainly deep-frozen french fries. |
Belgium |
Mister Bee Potato Chips Co
Mister Bee Potato Chips Co is
the only potato chip manufacturer in West Virginia |
United States |
Valmaq
Valmaq
manufactures equipment for the production of chips,
minimally processed vegetables and snacks. Valmaq is located
in Brazil |
Brazil |
Restrain Company Ltd
Restrain offers sprout inhibitions
systems for the storage of potatoes and onions based on
ethylene gas. |
United Kingdom |
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