The company explains the supply challenges it faces due to the extreme drought in Germany and other parts of Europe.
The Emsland Group’s raw material supply department stressed at the start of this season that the potato fields of the group’s contract farmers were in dire conditions.
The federal association BOGK also shed light on the situation in July.
The Group’s factories are now starting to process potatoes, and initial fears about this year’s potato harvest are unfortunately being confirmed.
The drought-affected area in Europe: combined drought indicator for the 2nd 10-day period of August 2018.
(Courtesy: European Drought Observatory)
The European potato harvest will be at an all-time low this year and will represent a major challenge for producers, processors and their customers.
Due to crop failures in the potato fields, some of which have been total failures, the availability of potato products will be drastically reduced.
The potato markets have been reacting massively to this drought for some time.
At the same time, some seed potato growers are already raising their prices for 2019, as they are also likely to suffer from reduced yields and quality issues, meaning that drought could also affect year-round plantings. next.
Emsland Group‘s raw material insurance model
In light of the challenges facing European companies as a whole, the Emsland Group has developed a raw material insurance model with representatives of potato producers.
This model supports producers by offsetting some of the damage by offering a drought subsidy and simultaneously offering incentives to provide as much raw material as possible.
In addition, a raw material guarantee subsidy is planned to secure crops for the year 2019.
Suppliers will be supported in their liquidity by advancing payment dates for delivered products in order to reduce financial bottlenecks in the potato harvest, especially when placing orders in the spring.
These measures are only included in the package for farms that will continue to grow their potatoes in 2019 at the same level as in 2018.
The Emsland Group wants this to signal that the supply of raw materials is guaranteed as much as possible for the years 2018 and 2019. In this way, customer requirements can be optimally met given the current situation.
All in all, the Group has decided, in this absolutely exceptional year, to take important measures to extend the company’s supply of raw materials in the long term.
Shortages and higher prices
In the short term, however, such measures will not prevent drought from severely limiting delivery capacities and increasing prices in all regions.
Emsland expresses the hope that its customers will be able to understand this strategy and the necessary prioritization of sustainable sourcing of raw materials.