1. Weekly News

Europe

Potato Yield Estimates in EU Drop, Likely Pushing Prices to Record Highs

Potato producers in critical European Union (EU) countries such as Germany, the Netherlands, and Belgium continue to lower their yield estimates for the 2024 tuber crop, potentially leading to record-high prices for commercial potatoes and those used for producing frozen French fries. The adverse weather conditions of 2023—a hot, dry summer followed by a wet autumn—have already compromised the quality of seed potatoes, causing significant issues for the current crop. This year, unfavorable weather continues to impact potato cultivation, particularly in northern EU countries, which delayed planting. Additionally, increased occurrences of late blight and pests increased market tensions and drove prices to historically high levels. Despite the European Commission's (EC) ongoing reductions in the harvest forecast, final yields may still align with the average of the past five years. Analysts estimates that EU potato production would need to increase by 3 to 5% to stabilize the market and reduce prices.

Potato Cultivation Declines Across Europe Amidst Changing Consumer Habits and Climate Challenges

Potato production has been steadily declining in the EU, with cultivation becoming increasingly concentrated in just a few countries. In 2023, nearly 70% of the 1.3 million hectares (ha) of harvested potato fields were located in Germany (19.9%), France (15.4%), Poland (14.2%), the Netherlands (11.7%), and Belgium (7.1%). This concentration reflects a broader reduction in potato cultivation across the continent. Climate change has played a significant role, as potatoes thrive in cooler, wetter environments, which have become less common due to rising temperatures. Additionally, the withdrawal of plant protection agents from the EU has made it more challenging for producers to manage potato crops effectively. Consumer trends also contribute to the decline. Particularly among younger demographics, there is a growing preference for alternative crops over potatoes, partly due to perceptions of potatoes as less healthy. Potatoes are often viewed as high in starch and carbohydrates with relatively low levels of vitamins and minerals, impacting their popularity.

Russia

Early Potato Harvest Begins in Moscow Region

The Russian Moscow Region commenced harvesting early potato varieties, with regional agricultural producers having already harvested from 230 ha, an increase of 50 ha compared to the same period in 2023. The current gross potato harvest stands at 5.9 thousand metric tons (mt), and by the end of the harvesting campaign, farmers aim to cultivate 12.4 thousand ha of agricultural land. The average yield per ha is reported to be 25.2 mt. According to the Minister of Agriculture and Food of the Moscow Region, the region's most commonly grown potato varieties include the mid-early table variety "Gala," known for its yellow color and smooth skin, and the early table variety "Red Scarlet," known for its resistance to hot weather conditions.

Ukraine

Vegetable Prices in Ukraine Expected to Reach Seasonal Lows by Late Aug-24 to Sept-24

The former president of the Association of Farmers and Landowners of Ukraine predicts that the lowest prices for several vegetables, including potatoes, onions, beets, carrots, and apples, will occur at the end of Aug-24 and into Sept-24. This period typically sees the lowest prices for many vegetables, but this trend may not apply to all crops. As mass harvesting of potatoes begins, prices are expected to decrease, albeit not drastically. However, the prices of some vegetables might start to rise again in Oct-24, though this will vary by crop. For now, the expectation is a temporary price dip during the ongoing harvest season.

2. Weekly Pricing

Weekly Potato Pricing Important Exporters (USD/kg)

Yearly Change in Potato Pricing Important Exporters (W34 2023 to W34 2024)

France

In W34, the wholesale price of French potatoes remained steady at USD 0.95 per kilogram (kg) week-on-week (WoW) but rose 9.20% month-on-month (MoM) from USD 0.87/kg. The MoM increase is due to recent challenges producers face, including climate change, which led to heavy losses for farmers who now must adapt to more frequent extreme weather events. Adverse weather in 2024 forced farmers to delay planting, resulting in expected delays in harvesting and increased vulnerability to diseases like phytophthora. Due to these challenges, the president of the National Union of Potato Producers (UNPT) anticipates prices will remain high as there is no immediate reason for them to fall.

Germany

In W34, the wholesale price of German potatoes rose by 6.10% WoW and 4.82% MoM to USD 0.87/kg, marking the third consecutive week of increase. This rise is mainly due to wet weather disrupting harvesting in some regions, causing rot and reducing supply. Key EU potato producers, including Germany and Belgium, continued lowering their tuber yield forecasts. The 2023 weather conditions, a hot, dry summer followed by a stormy autumn, resulted in significant quality issues and affected seed potatoes. In 2024, farmers with processing potato contracts found that the seed potatoes had lower yield potential than usual, forcing many processors to revise their supply agreements downward. Despite the recent price increase, prices have dropped by 14.28% year-on-year (YoY), attributed to reduced market demand as chip factories are adequately supplied under existing contracts and do not require additional purchases.

Pakistan

Pakistan's wholesale potato prices remained steady WoW at USD 0.29/kg. However, prices rose 3.57% MoM due to high inflation, which reached 17.96% in W30, driven by increased taxes and electricity prices as outlined in the federal budget. Prices are expected to continue rising in the coming weeks. Year-on-year prices have surged by 42.20%, mainly due to an increase in electricity rates approved by the National Electric Power Regulatory Authority to cover deferred payments.

Egypt

In W34, Egypt's wholesale potato prices rose 5.71% WoW and 34.42% YoY to USD 0.37/kg. This price increase is due to a significant reduction in yield, with production falling from 14 to 16 mt/acre in 2023 to 9 to 12 mt/acre in 2024. Yields from local leftover seeds have decreased to around 7 to 10 mt/acre, resulting in a 35 to 40% YoY drop in market supply. Given Egypt's annual production of approximately 7 million metric tons (mmt), the strategic importance of potatoes is underscored, mainly as rising prices for meat, poultry, fish, and other commodities boost demand for this staple crop.

3. Actionable Recommendations

Diversify Production Strategies and Market Outreach

Given the adverse weather conditions and declining yields in critical EU potato-producing countries such as Germany, the Netherlands, and Belgium, producers must diversify their production strategies and market outreach. Producers should adopt climate-resilient farming techniques, including precision agriculture, soil moisture management, and drought-resistant potato varieties, to address these challenges. These measures will help mitigate the impacts of extreme weather and ensure more stable yields. Additionally, exploring alternative markets beyond traditional EU destinations could provide new opportunities for potato exports. Emerging markets in Asia, such as China and India, as well as regions in the Middle East, could offer potential growth areas that offset the reduced supply within Europe. Investing in research and development to collaborate with institutions to create new potato varieties resistant to diseases like late blight and adaptable to varying climatic conditions will further enhance resilience. Producers can stabilize revenue streams and maintain more consistent production levels by reducing dependency on a few key markets and improving climate resilience.

Monitor and Adapt to Global Market Trends

Pakistan and Egypt are experiencing significant price fluctuations due to local economic and climatic factors. Producers should closely monitor global market trends and adapt their strategies to manage these fluctuations effectively. Keeping track of price movements in significant global potato markets will provide valuable insights into adjusting production and export strategies to capitalize on favorable conditions. Producers should be prepared to adapt their pricing strategies to remain competitive while maximizing profitability. This could involve offering competitive prices in high-demand markets such as EU and Gulf Cooperation Council (GCC) or adjusting export volumes according to price trends. Engaging in market intelligence by investing in tools to better understand demand patterns, price forecasts, and potential disruptions in key markets will also be beneficial. Proactively adjusting pricing and production strategies based on market intelligence will help maintain a competitive advantage and improve profitability, while understanding emerging trends and opportunities will facilitate better decision-making.

Address Consumer Trends and Enhance Marketing Efforts

To counter the shift in consumer preferences towards healthier alternatives that impact potato consumption in Europe, producers should focus on marketing and promoting the benefits of potatoes while exploring ways to appeal to changing consumer preferences. Highlighting the nutritional benefits of potatoes, including their versatility and the potential for healthier preparations, can help improve consumer perceptions and drive demand. Educational campaigns emphasizing potatoes' health benefits and their role in a balanced diet could attract more consumers. Investing in developing innovative potato-based products, such as low-carb or fortified varieties, will cater to health-conscious consumers and broaden the product appeal. Leveraging digital marketing strategies to reach younger demographics and promote potatoes' versatility and health benefits through social media and online platforms will also be advantageous. Enhanced consumer awareness and product innovation will help increase demand and address declining consumption trends, while targeted marketing efforts will attract new consumer segments and drive sales.

Sources: Tridge, Eastfruit, Agro Vesti, Agrotimes, Agronaplo, AgroPortal, newindianexpress