Potato starch supplier Emsland warns of ‘dramatic’ increase in raw material costs

Sep 05, 2018 — The European potato harvest will be at an all-time low this year and will represent a major challenge for growers, 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. According to the raw material supply department of the Emsland group, the potato fields of the group’s contract farmers are in dire conditions.

The German Association of the Fruit, Vegetable and Potato Processing Industry (BOGK) expects the potato harvest in Germany and Europe to shed light on the situation in July as well.

Experts in agriculture and the potato processing industry say that at present, the harvest should be reduced by at least 25 percent; Large potatoes, necessary for the production of French fries, will only be available in small numbers or, in the worst case, not at all in many areas.

Since May 2018, Europe has experienced a period of drought and above-average seasonal temperatures, including numerous heat waves.

Europe lives what farmers are
calling it “the worst drought in recent history”

Europe is experiencing what farmers call the “worst drought in recent history” – which could create food shortages and financial problems for Europeans. The Lithuanian government has declared a state of drought emergency and Latvia has recognized it as a nationwide natural disaster. Norway, Ireland and Denmark have imposed water restrictions.

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, which means that drought could also affect year-round plantings. next.

In light of the challenges facing European companies as a whole, the Emsland Group has developed a commodity insurance model with producer representatives. 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.

Patrick Geers, marketing associate for Emsland, tells FoodIngredientsFirst: “The potato as a natural product can always experience ups and downs in the harvest. Therefore, it is not possible to give any indication for the future of next year’s crops. As far as we know, there will be enough seed potatoes for the next harvest to come. However, we can already predict that at the start of the new season, stocks will be empty. We can therefore expect another tense year in terms of availability and restocking. “

“Without having the exact result of the harvest now, we do not expect major differences from the prognosis. The first results of the harvest confirm the dramatic prospects, ”he explains.

“This year the cost increase will be spectacular and for the next season we expect new prices at higher levels, perhaps not as extreme as this year but significantly compared to last year’s level. . ” Details on whether raw material costs will have to be passed on to customers and to what extent have not yet been disclosed by the main potato starch supplier.

In terms of spreading their bets, Emsland also supplies pea starch, for example, which will potentially offset some of the impact of this year’s campaign. “We are converting pea crops to an alternative crop and have been doing so for almost 15 years. We will be increasing pea conversion this year, due to the shorter potato season. In certain applications, pea starch notably offers rapid gelation properties. In some other applications, substitution of potato products is also possible, ”says Geers.

Patrick Geers, Emsland: “We can expect another tight year
regarding the availability and replenishment of stocks.

He also notes that his advice to companies facing the same challenges would be: “Contract farming, contract farming, contract farming. Otherwise, the result this year would be even worse.

This should signal that the raw material supply is secure as much as possible, for the years 2018 and 2019. In this way, customer requirements can be optimally met depending on the situation.

All in all, the company has decided, in this exceptional year, to take essential measures to expand the company’s supply of raw materials in the long term. In the short term, however, such actions will not be able to prevent the drought from significantly limiting delivery capacities and increasing prices in all areas. “We sincerely hope that all customers will be able to understand this strategy and our priority of sustainable sourcing of raw materials,” the company says.

Avebe is an international cooperation, owned by farmers in the Netherlands and Germany.

A spokesperson for the company tells FoodIngredientsFirst: “In general, as in other parts of Europe, many of our member farmers have had to deal with severe droughts and high temperatures during the season. As a result, we plan to process significantly fewer potatoes this year. The first fields harvested for this production campaign which has just started confirm the drop in potato yields.

Earlier this week, the European Commission proposed actions to increase the availability of fodder resources for livestock, one of the main challenges facing farmers facing the impact of drought. The package complements measures announced last month and comes as farmers across Europe are hit by drought this summer. You can read the entire article here.

The potato is just one crop that is strongly affected by the recent hot weather. Drought in many parts of Europe is also causing significant damage to wheat, maize and barley crops. You can read more about it here.

By Elizabeth Green

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