Potatoes market outlook
- The potato industry has seen some unusual trends for the 2018 crop marketing season.
- Given the known reduced supply following the summer drought, processors and pre-pack businesses have altered their purchase patterns, choosing where possible to often bring forward contracted supplies.
- While this has mitigated some supply issues for purchasers, the remainder of the 2018 crop marketing year will be an interesting one.
The past year’s price volatility after the abundant 2017 crop, followed by a drought-hit 2018, may have given less incentive to expand planted area.
Additionally, seed availability has been somewhat reduced for this year, causing further disincentive for an area expansion.
- Looking ahead to new-crop, although the critical development stage for main crop is still a little while off, there are some concerns mounting regarding availability of water. River levels in the East are exceptionally low, notably the river Ouse and Cam.
- Yet while there are some concerns over water availability concerns for the 2019 crop and the area is unlikely to increase, the current 2018 crop has been adequate to satisfy demand.
- Barring the possibility of another drought-hit crop in 2019, the market is likely to remain similar or below that of the 2018 marketing year.
For the remainder of the 2018 crop season, although contracted supplies have been heavily relied upon and specifications widened, there could now be a dependence upon the free-buy market to make up any shortfall.
However, while there is the volume of potatoes available to satisfy demand, there is likely to be further widening of quality and prices.
As the remaining stocks diverge in quality, the free buy market, especially for the pre-pack sector, is likely to become split. Higher quality supplies with good size may command increasing premiums until the new crop becomes widely available. Conversely, prices for lower quality supplies could come under pressure.
From a processing sector point of view, by using a larger proportion of contracted material, buyers are less likely to need to purchase free-buy supplies. With balanced supply and demand, and earlies potentially coming on ahead of schedule, the outlook for the processing sector could well continue in the same vein for the 2019 crop.
Markets could well become interesting for the remainder of the season in the chip shop trade. Although portion size may have been reduced by some to maintain profitability amid higher prices, the available supply of good frying material may well be coming to an end sooner than usual. As such, prices for good quality bagged supplies have been rising recently. Although with Spanish crops now being lifted, potentially destined for the UK, prices of high quality material may only be able to rise so far.
So while the 2019 crop isn’t far way, each individual sector has a slightly different outlook for the next couple months. What can be said is that much will depend on the speed of development of this year’s crop.
GB average WAPS prices (£/t)
Potatoes consumption trends
Fresh potato sales have been relatively flat over the last year, according to Kantar Worldpanel, with volumes down 0.2% in the 52 weeks to 21 April 2019. Following a long period of declining sales, driven by changing lifestyles and modes of eating, fresh potatoes appear to be stabilising.
Convenience products show mixed results – while crisps have seen a volume fall, other savoury snacks have seen particularly strong growth in the last year, with volumes up 8.8%, driven by a strong increase in purchase frequency, with the category also launching new flavour combinations. Potato snacks make up 40.0% of the total volume of savoury snacks.
Chilled potato products (e.g. prepared mash), however, have seen declines in the last year (-6.1% volume), which may be linked to a general decline in ‘traditional’ meat and two veg meals, with consumers increasingly cooking foreign cuisines in the home.
- We would expect fresh potatoes consumption to remain stable in the short term but, in the long term, the trend of reduced per capita consumption is likely to return at some stage.
- Fresh potatoes are likely to face continued pressures as consumers seek convenient, easy-to-cook meals and increasingly gain meal inspiration from far-flung places around the world.
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Gallery: Potatoes at a glance
Click on the thumbnail images below for simple visual explanations as to how the potatoes market has performed, according to the latest data. Here we look at GB and international prices, consumption, production and trade figures.