Rising Input Costs and Adverse Weather Will Continue to Affect the Potato Sector in the Netherlands

Value Added Potato

Published May 25, 2023

The price of processed potatoes has reached record levels in the Netherlands, at Euro 43/100 kg in W4 of May 2023. At the same time, potato farmers are battling excessive rains and the imposed Nitrates Directive from the EU. Overall, the potato sector in the Netherlands is grappling with the impact of adverse weather, rising input costs, and regulatory changes, all of which pose significant challenges for farmers and affect the profitability of the industry.

The adverse weather that hampered the Dutch potato sector in 2022 continues its unfavorable effects this year, with added predicaments like this spring's extensive rains. Taking input costs into account, potatoes meant for processing in the Netherlands face difficult times ahead. This year started with elevated prices for processed potatoes, rising fast to Euro 44-50/100 kg in W21. Demand for potatoes surged after Covid when food processors and restaurants resumed their usual businesses. This increased demand, coupled with uncertain supply, will lead to further price hikes.

Storms in W1 of May 2023 severely damaged certain areas in the Netherlands, crushing the ridges and ruining the planted starch potatoes. These wet conditions also increased the risk of disease outbreaks. A cold spring and wet conditions in Northwestern Europe contributed to the current potato market tightness.

Due to inclement weather, potato planting has been postponed in nations like the Netherlands, Belgium, Germany, and France. Postponed planting could lead to yield loss of as much as 15%, according to Dutch agronomists. Despite a somewhat extended dry spring and summer in 2022, a high harvest of 3.93M MT is projected in the Netherlands for the current season. Similar volumes were only achieved in 2011 and 2017 in the last decade. For starch potatoes, volumes are expected to reach around 2M MT.

Source: Nieuwe Oogst

Another factor is the input costs. Despite the decrease in 2023, Dutch potatoes are ‘’pulling’’ costs from the CY 2022, where petrol prices have gone up 43% YoY, electricity 145% YoY (recent Tridge analysis on Dutch vegetable production costs), and packaging 24% YoY. All aforementioned factors led to elevated prices in the potato sector. The price of early fresh potatoes has climbed to Euro 2/kg, while chips potatoes from the 2022 harvest for delivery in June have risen to over Euro 43/100 kg on the potato futures market. Contracts for potatoes harvested in 2023 and delivered in April 2024 are being traded for Euro 24.70/100 kg.

The new Nitrates Directive in the EU, aimed at maintaining water quality throughout Europe by preventing nitrates from agricultural sources from polluting the ground and surface waterways, will undoubtedly put pressure on potato growers in the Netherlands. Starting this year, potatoes grown on sandy soil must be harvested by October 1st to prevent hazardous nitrates and nitrogen compounds from entering groundwater, according to the European legislation. This may limit suitable surfaces for potato production in the Netherlands due to the longer ripening time for potatoes on sandy soils. It is estimated that around 80,000 ha of potato acreage meant for processing and approximately 3,000 growers will be affected by this measure.

The potato sector in the Netherlands is faced with increased demand for potato starch and protein, while at the same time, production problems are worrying farmers and affecting profit margins. Elevated prices for processed potatoes are much needed for growers, not just in terms of profit, but more importantly, for farmers not to turn to more profitable and less demanding productions like grains and protein crops.