Still growing potatoes but at what price?

Here is the weekly Word on the Ground column, this time by farmer Richard Barlow...

It is surprising how misinformation can quickly become fact!

I was surprised to see my fellow contributor to Word on the Ground claim recently that potato growers were receiving considerably more for their potatoes due to the energy/Ukraine crisis.

I don’t know what her source was, but it may have come from the BBC News, whose economics editor had run a piece on the cost of fish and chips and claimed potatoes were costing 30% more – it shows even here in the UK you can’t believe everything you are told.

The truth is that for the second year in a row we are receiving considerably less than the cost of production for much of our 2021 crop.

We sell 33% of our potatoes forward on a fixed price basis, another 33% we commit to a customer, with the price being agreed at the time of supply (MRP – market related price), and the remainder on what we call the open market.

It is impossible to contract 100% as we – the grower – don’t know what yields we are going to get and the customer doesn’t know the exact size of their orders.

We have already signed supply contacts for the coming season, before a single potato has gone in the ground.

We didn’t know what we would be paying for fertiliser, agchems, diesel or electricity when we signed these contracts.

For growers to honour these fixed price contracts, a surcharge is going to have to be added on top of the agreed prices.

We are already having a surcharge added by the hauliers who are delivering this year’s crop to the packers, which we currently aren’t passing on – yet another sign of the power of a few supermarkets over a fragmented supply base.

The immediate concern is how much cash we are going to need to finance this year’s crop.

The inflation of our inputs is much greater than the headline figure and the financial risks are a major concern if a weather or political disaster should happen.

Looking forwards to the 2023 crop, there is no way I’ll be able to sign a fixed price contract, though I’ll be willing to sign a MRP supply contract.