A seasonal boost was exactly what the doctor ordered for the potato category at the back-end of 2008, when the major players reported some of their busiest trading periods for a long time.
But the last 12 months have seen a fair few ups and downs for the potato category, with a cold start to crop development and alternating wet and dry growing periods lowering tuber numbers and increasing cases of wet rot. The quality of crops, however, has been generally good.
The maincrop harvest was particularly difficult from September through to November, because of floods and waterlogging in many regions. By the end of November, following severe frost, around one per cent of the crop had either been lost or still remained in the ground.
“The last three months have been very wet and very difficult,” says one insider. “A lot of soil was brought into stores, which increased the cost of the harvest because it had to be separated. The last 20 per cent of the crop will need careful management in store to maintain product quality.
“There has been some effect on price, but there have been plenty of potatoes on the market because of the need to move product rather than store it, especially because the cereal harvest was later and took up storage space. At the same time, growers have been eager to keep sales going.”
This meant that supplies in the lead-up to Christmas were ample because suspect keeping quality, lack of storage capacity and the need to maintain cash flow put more pressure on growers to keep material on the move. But prices weakened as the major retailers put increasing emphasis on value or secondary lines, in response to the number of consumers trading down.
“Right the way through, there has been a good demand for secondary grades for value pack lines, which have become more popular as consumers are increasingly trading down. This is continuing at the moment and we expect it to continue,” says one insider.
“Price-wise, I would expect to see a flatter market developing, but with bigger price increases for the best-quality product.”
The market balanced itself out in December when sales got a boost and demand for better-quality stock saw prices climb in the last weeks of the year. Traditionally, most of the poorer-quality samples are sold in November to clear the way for the more discerning Christmas offer.
“We concentrated on high-quality stocks in the run-up to Christmas, but we found it was generally a quieter time than we have had for a few years,” says one grower. “But I think the retailers must have under-ordered because things got really crazy right before Christmas and we have been busy ever since - we worked all of Boxing Day just to meet the orders.”
Imports have been limited by the exchange rate, with relatively low volumes of new-season potatoes set to be brought in from the likes of Israel and Egypt.
The wholesale trade was busy over the festive period, with mid and ware potatoes proving the most popular on the markets. Alternative root vegetables such as parsnips enjoyed a massive boost and sales even doubled in some areas. However, since then activity has slowed.
UK-grown potatoes are making anything from 350-900p for 25kg, depending on the variety and quality. The price of French mids ranges from 300-400p to 700-800p for 10kg, while imports from Cyprus are fetching 1700p for 20kg.
“It has been an average start to the year, but English product is still cracking on and the quality is much better than last year,” says one Manchester trader.
Preparations for next season are already underway, with token planting started in Cornwall over the Christmas and New Year holiday. The likes of Pembrokeshire, Kent and south-west Scotland are not likely to make a start until mid-February.
Growers are reluctant to open stores in many regions because they fear the cold weather will increase the risk of bruising in transport. Many with best-quality material are holding back until prices increase.
The outlook for this year looks better for the potato category than most, now that consumer attitudes towards spending continue to change and the perception of the spud as a wholesome and reasonably priced staple wins out.
“We faced a lot of challenges all the way through 2008 and it was an average season for quality, but it is still too early to tell how next season will pan out,” says a supplier. “Home-grown potatoes make a good offer for consumers at the moment, because prices are reasonable, but the quality standards always have to reach a certain level.
“Storage is the main concern in the UK at the moment and, over the next few months, growers will have to watch stores closely to make sure their material remains in good condition.
“All available price information on the markets should be monitored,” he adds.
QV FOODS READY FOR BUSY 2009
QV Foods is a wholly owned subsidiary of its parent company, AH Worth, a family business based in Lincolnshire, says Simon Martin, sales and marketing director at QV Foods. We operate from three purpose-built factories and have more than 20,000 million tonnes of environmentally controlled box stores on our 54-acre site, near Holbeach. AH Worth and QV Foods jointly farm 2,050 hectares, growing in rotation upwards of 650ha of potatoes. QV offers a wealth of knowledge and expertise in all areas throughout the supply chain of fresh and prepared potatoes and vegetables. The QV asset base and business structure provides a sound basis for continued growth. Our technical department is tasked to ensure that we have full traceability and that all product is compliant with current food safety legislation. We are kept up to date with the latest developments by having close links with many trade, government, technical and research bodies.
We continually re-invest in source development, new product offerings, infrastructure and agronomic developments to ensure that the business remains at the forefront of product development and innovation. Recently, our bulk trading department has established itself as a primary supplier to major processors throughout the UK, gaining a reputation for providing the customer with the quality and product specification required under back-to-back, year-round supply contracts. Clearly, this would all be impossible without the support of a UK-wide network of good, reliable professional growers, and we are one of the few potato companies retaining and developing an on-farm presence.
Quality starts with seed; QV Foods co-founded Pseedco Ltd in 1995 in order to provide “plantlet to plate” traceability and a selection of the highest-quality seed potatoes available from Scotland, England and Wales, as well as Europe.
Pseedco continues to set the standard for seed and service quality with its exceptionally high-quality branded seed, which has disease tolerances up to 20 times higher than the industry standard, as well as providing ware growers with the cost-effective, quality options of slightly lower and standard grade.
Pseedco also has representative links with several US breeding programmes to further develop its extensive variety range into both the fresh market and processing sectors of the industry. In 2008, it became a fully owned member of the QV Group.
The industry is in an interesting and challenging time. Growers are still under immense financial pressure, with tight margins due to increased costs and market pressure to keep prices low. This is why, over the last 10 years, QV has developed a strategy to ensure that growers’ material can be targeted at all sectors of the market, regardless of quality or size, from fresh packing to processing, either at QV or elsewhere - all to ensure maximum returns for the grower. The economic climate is also creating additional concerns to all sectors of the industry and there may be casualties.
However, QV continues to view the future positively and is investing in growing potatoes and packing infrastructure.
The outlook will continue to be for a tight marketplace. Companies are going to need to be innovative to ensure that product finds a home at a sensible price, as all through the supply chain pressure is placed on the pricing structure as, ultimately, the high street looks for continued price cuts. Quality, variety and sizing will all be variables that will be looked at over the remainder of this season to ensure maximum value is extracted from crops, while offering the consumer “value for money” concepts.
No comments yet