Offering faster prospects for growers in uncertain times

Annelous Groenwold does not have to think long about what concerns her and her fellow farmers most. Even more than laws and regulations, inflation is now causing them difficulties. She says: “We have a growing plan for peat colonies at home. You already start incurring costs for revenues that won’t arrive until September/October to May next year in the spring. Liquidity is under pressure. Prices of fertilisers and plant protection products have risen sharply, as have those of seeds and seedlings. The cost price came under pressure even before the growing season, and growers are wondering what awaits them for the rest of the year.” Arjan de Rooij explains: “As an arable farmer and a member of Royal Avebe, you have only limited options to recoup that increase in costs for necessary input such as fertilisers, crop protection products and fuel in productivity improvements. Farmers have always striven for optimal productivity. Avebe has to earn this in its starch potato growing operations in the market. On the positive side, our fellow producers in Europe and their potato suppliers face similar cost increases. For that reason, the best approach is to pass on these increases to our customers.”

Performance price

Annelous: “What we hear in the field is that the performance price is rising, but has to rise more. Avebe notes that the current situation also creates
opportunities. That’s good, but it’s also very necessary because otherwise growers will have to contribute financially.” Arjan: “Avebe’s efforts should increase its earning capacity, the extent to which added value is created. Since conditions have changed in such a short period, we need to achieve this value creation more quickly. First of all, by selling our products in the market at a higher price and working on our own costs and how we produce and process potatoes.”

Ukraine

Arjan: “Despite the huge increase in the cost of energy, packaging and transport to our customers, the campaign price for 2021 was higher than the
previous year. For the new season, we expect to be able to pass on the increased costs in the cultivation and processing chain to the market. The performance price is expected to take a big step next year. But the uncertainty in the market and the enormous cost increases mean that this will not happen on its own. The intention is clearly to exceed one hundred euros per tonne. The war in Ukraine is causing a fluctuating market in raw materials and energy. This creates uncertainty but also opportunities in the market. Based on the new reality and the pressure on the liquidity of our members’ businesses, the basic price will be at a
significantly higher level than last year.” He continues: “Avebe also faces significantly higher energy costs for processing potatoes. Processing a wet product into a dry end product is quite energy-consuming. This is a substantial challenge and creates uncertainty. Transport costs also depend on
container companies. In April, for example, the coronavirus led to lockdowns in China, such as the one in Shanghai. This has a major impact on the port there, resulting in delays and price rises.”

Laws and regulations

Annelous: “As well as serious concerns about price setting, it is also difficult for farmers to remain calm in the face of ever-changing laws and regulations. People feel attacked and that they are constantly being blamed. This happens time and time again, and results in anger and frustration. At our business, but also that of colleagues. Avebe immediately took a stand against this, together with the Branch Organisation for Arable Farming and other parties in the chain. On the one hand, that gives a lot of confidence. But it also frustrates growers that so many parties have to put their energy into plans that have been thought up behind a desk and have no connection with actual practice. And this is precisely when we most need innovation and market development to cope with rising cost prices.”