Free market for potatoes in Belgium collapsed due to COVID-19

Due to the corona virus the free market of potatoes has completely collapsed. The PCA/Fiwap and the Belgapom price quotation has been suspended because of a lack of transactions on the free market of potatoes. According to Romain Cools of Belgapom, the federation of the Belgian potato processing and trade, in the meantime panic broke out among potato growers.

Romain Cools of Belgapom:

“If the free market will recover, will depend from how the disease will evolve. The outlook is not that great.”

“There is not just one potato market. Different potato markets do exist, with their own laws and features.”

“Today we experience a significant increase in demand of fresh potatoes. Some speak of an increase of 50 to 100 percent.”

“We know that several companies work during the weekend and that even office personnel is used within the production chain.”

Firstly, Romain Cools wishes to give the needed nuances. The first one is the fresh market. From questioning his members, Belgapom concludes that some companies which focus on the fresh market, do experience incredible busy times.

This seems good news, but the problem is that there are specific varieties which are sold for the fresh market and these do not include the varieties Fontane or Bintje, which are the two most produced types in our country. It mostly concerns contracted potatoes, the free market plays a minor role here, he explains.

On the other side, there are segments of the free market which experience hard times. The peel factories which peel potatoes for chips shops and restaurants experience hindrance, similar to industrial kitchens. The demand has totally disappeared in this case.

A second segment is the chips market. Also in this case this applies to potato varieties which are not suitable as a regular table potato.

Romain Cools:

“In the supermarkets we see that potato chips are being sold easily these days, maybe because people doing so would like to enjoy their time at home, but on the other side another sales channel is lost. Chips are often eaten in a social context which is not present these days.”

“Also the closure of bars and cancellations of sport events like the European Football Championship and soon maybe the Olympic Games, can have a big impact on sales.”

Also for this segment it mainly concerns contracted potatoes.

Last but not least, we have the third and largest segment: the market of the frozen french fries. 90% of what is being produced in our country, is exported. More or less two third stays within the European Union, a third is being exported outside the EU.

Belgapom sees that the Belgian potato processing companies keep exporting, but experience logistical problems. The cost price of for example a cooling container has tripled in comparison with a couple of months ago.

Romain Cools:

“This means that the company stocks are becoming full.”

“As our biggest sales market are countries within the EU, the closure of some country borders are problematic. At the border with Poland there are giant traffic jams. The EU has promised no ‘green lines’ between the EU countries for the transport of food, but it remains to be seen if this will actually happen.”

“It concerns companies which mainly deliver to the fastfood sector. Fastfood restaurants have closed the doors, which has led to a drop in demand.”

“But the cancellation of big events, like the European Football Championship will no doubt have an impact. These are events during which an enormous amount of fries are being consumed”

At the same time, Belgapom expects that the demand of frozen products in retail will last, but not every factory is suitable for processing for retail.

Closure of potato processing companies in Belgium has not yet happened, but Belgapom knows of factories abroad which have come to a standstill.

The long distance export to among others China and Asian countries which suffer from the outbreak of the corona virus, slowly restarts.

All these facts together result in little to no demand in potatoes on the free market right now. This is also the reason why the Belgian test centers for the potato cultivation, PCA and Fiwap, have decided to not publish a price quotation last Tuesday.

Also in The Netherlands no price quotation happened and Friday Belgapom said not to list either.

According to Cools this currently causes panic among the potato growers which still have an enormous quantity of potatoes on the free market.

Romain Cools:

“They see what is happening and are going to offer their stocks en masse to the trade and processors as a result of which the price completely collapses. We now receive the question from growers to urge for a purchase scheme or to request subsidies.”

“But the one who is active on the free market, needs to understand that the risks are the same as on the exchange.”

“Also if picking up the contracted potatoes results in a delay, this does not necessarily mean a cancellation. In the past we have tried to respect contracts, also during the crisis year 2017. And for us it is crucial to do this in exceptional circumstances.”

Belgapom says to take all the measures in order to fulfill the contracts agreed between the trade and industry on the one hand and the growers on the other hand.

If the market will restore, remains to be seen. At last he addresses the consumers.

Romain Cools:

“These are very unpredictable times. All will depend from how the disease evolves and how the new potato season will deploy. But we need to understand that the problem can become even more bigger than is the case today.”

“The consumer needs to understand that it is important that he keeps consuming potato products. That is the way in which he can support our companies.”

“On the other side it might be needed that people need to assist in the food sector in order to get all the work done. Flexibility is the keyword.”