Processors rein in acreage in contracts

The European potato processors will significantly cut back on the potato area to better balance supply and demand for French fries potatoes. How they will achieve this varies by company. For those who are far from their customer, it is a bitter pill to swallow. Much is still unclear regarding the methods and contracts for the 2026 growing season. Most companies have not yet made any official statements regarding their pricing policies, with the exception of Agristo. However, some companies have held grower meetings, and their field staff are also busy with year-end rounds. This way, growers are gradually fed the bitter reality of the coming year. Collectively or individually Most French fry potato growers recognize that the current acreage in the EU-4 countries does not match the market for the end product fries. But when significant cuts have to be made, it is still a tough blow. Whether the processor does this collectively or looks at the individual grower varies slightly. Both options are also a possibility, such as a collective 15% discount in volume and more on a grower level. Percentages up to 50% are mentioned. Agristo indicated during its recent grower meeting that it applies a collective volume discount of 15%, as noted in the ABS Potato Talk. It is clear, however, that particularly for potato growers who are further away from the factory, a larger discount is applied. Both in price and volume. For the Netherlands, this means that arable farmers in Groningen and Drenthe will have to take a hit. Not only when they have supplied French fries potatoes to Belgian companies in recent years, but also to processors in the Netherlands. If savings can be made on transport costs, that will be done. There are also customers who choose to put the transport costs on the grower in the form of a discount on the contract price. Cutting back offshore kilos This approach is not unusual. Look at onion cultivation, where in general, a cent less is quickly paid in North Netherlands due to transport. For potatoes, this is new. The past five years focused solely on obtaining more acreage and volume, making higher costs of secondary importance. That is now different. This also applies to the prime cultivation in regions like Bordeaux, where cuts are also being made or where a complete cultivation pause has been introduced. In any case, during the offshore period, there is much less need for potatoes. Another determining factor is the quality of recent years. What have you delivered, are you farming on sandy or clay soil, and can you load and store dry? These are all factors that play a role in the customer's decision to do business and what kind of contract they will present to you. In addition to a volume discount, Dutch customers can vary the number of tons per hectare. In Belgium, this is not the case with ton contracts, but here it is common to fix up to 40 tons per hectare at a fixed price. Depending on the soil type, that might be 30 (clay) or 25 (sand) tons, an insider reports. More acreage or not, the price risk will largely fall on the grower themselves. Clarebout and Simplot What could add extra dynamics is the acquisition of Clarebout by Simplot. The Belgian company is the largest European processor, with 4,000 affiliated growers and three million tons of potato processing annually, spread over five locations. In the past, the company worked with potato traders for raw material supply, and it’s uncertain how this will go under Simplot's leadership. In any case, much is still unclear about the plans of the new owner, who can access production locations in North and South America, Australia, New Zealand, and China. The goal of the measures is to significantly reduce the EU-4 potato area. Multiple talks about a 'reset' of the sector have taken place, as Weuthen director Ferdinand Buffen announced this summer. In an analysis about 10 critical changes in the potato market we wrote about a 10-20% reduction in acreage that is necessary in the EU-4. Insiders from the industry mention a rule of thumb indeed suggesting a reduction of 15% is essential. 90,000 hectares less Calculating with this percentage, the acreage in the EU-4 (Netherlands, Belgium, France, and Germany) for 2026 comes to 515,260 hectares of consumption potatoes. A decrease of no less than 90,930 hectares. This brings the acreage almost back to 2023 levels, meaning that the growth steps of the past two years have been undone. By calculating with a five-year average yield of 42 tons per hectare in the EU-4, you get an average harvest of 21.64 million tons of potatoes. This is virtually equal to the yield achieved in 2022 and 6 million tons less than the volume harvested this year. That volume is likely somewhat tight compared to the demand, which, given the current processing capacity and sales, is around 24 million tons. This means that with an average harvest, that 15% shrinkage is quite substantial. This is good news for a positive free potato price. Free cultivation Whether the soup will actually be eaten as hot as it is served remains to be seen. Additionally, the availability of seed potatoes for many varieties is not an issue for the upcoming season. This theoretically allows for more free cultivation, provided growers dare to take that risk with these cost prices and an uncertain market. What the acreage actually comes down to, therefore, remains very uncertain.