Ultimate test or opportunity for potato pools

The french fry potato pools face a huge challenge this season. Those without fixed agreements with buyers have to do their best to sell potatoes. Moreover, there have been hardly any moments to hedge through the futures market. Nevertheless, not everyone is pessimistic. It can also be seen as an opportunity. Regardless of what the season would bring, the potato pools have been under pressure for some time due to the non-functioning potato futures market. It is precisely by hedging with this instrument that pools can often achieve results that are above the free physical potato market. Alarm bells More than a year ago, the Potato Growers Committee (ATC) of Aviko already sounded the alarm regarding the futures market and the far-reaching consequences that the absence of a well-functioning futures market can have on the pool result. With an outstanding position just above 300 contracts (7,500 tons) and hardly any contracts traded since October 1, market functioning has only further deteriorated. This is partly due to the fact that more and more potato processors are avoiding the futures market, even though they do offer futures-based contracts. If you look back at the statements made by André Broeze and Hilchard Waalkens, respectively chairman and member of the Aviko ATC potato pool, you see the painful truth with the current knowledge. We've had some good years, but other times are definitely coming, Waalkens said in November last year. And Broeze this summer: During the pool meeting, I jokingly asked if you are satisfied with half of the current contract price? In the end, it was much less than that, with only €25.07 per ton compared to €215.89 per ton a year earlier. A price drop of 88%. The Aviko pool is by far the largest in our country, but certainly not the only one. There are also Q-Potato, Nedato, Schaap Holland, and APF-Eriva. The volume in pools is steadily shrinking. Especially when the fixed-price contracts rose significantly in price. More than ten years ago, there were about ten different pools active in the Netherlands. That number has since been halved. No free market While the absence of a functioning futures market may be a problem for the pools, the physical market also offers little relief. And this also impacts the futures market. For premium varieties like Innovator and Agria, there is still some market, but interest in bulk varieties is currently zero. Few words When you are being sheared, you must stay still, most pool managers think. They are not very eager to elaborate on the current situation to DCA MI. We do not make statements about the pool; that is something we discuss with our growers, says Nicole van Doorn of Nedato. Q-Potato owner Dirk van de Water summarizes it briefly: It doesn’t matter whether you are in a pool or have a contract; manufacturers are cutting on all sides right now. It is essential to see opportunities in the market and minimize damage. The better-valued varieties, such as Innovator and Agria, do find a buyer. In the case of bulk varieties, especially Fontane, quick decisions are being made to part ways. What the combination of a non-functioning futures market, lack of demand, lower contract prices, and declining volumes means for the pools is difficult to predict. The pool managers are thinking about it, but making statements now is risky. Since February, the market has collapsed, and that negative segment has been carried into the new season. This declining trend has not yet reached its bottom, several pool managers believe. They hope that in the second half of spring, there will be some relief, provided that french fry sales do not drop further. The progress of the seed season also plays an important role. Meanwhile, growers in a pool can do little more than wait. Most companies use various marketing forms, and switching to contracts now is impossible. Potato processors will contract fewer potatoes for 2025/26, so there is no room for more volume. Growing more free-buy potatoes is the alternative but also the most risky. It is still too early to see a pattern where potato growers consider switching. They are looking for certainty, which is currently hard to find. Increasing free market The first signals indicate that most potato processors will contract fewer tons at a fixed price next season. The chance that farmers will grow fewer potatoes is small given the lack of alternatives. As a result, the volume of free potatoes will significantly increase in 2026/27. Variety optimists see it as an opportunity, which could also revitalize the futures market. More risks are emerging in the potato market, and they need to be covered. This applies to both the grower and the buyer. Thus, next market season may very well have its own dynamics.