Throughout 2022, potato growers were impacted by higher production costs, largely from energy, fertiliser and transportation. Higher costs are weighing on growers’ profit margins and are driving the cost of cultivation and storage to unsustainable levels. Additionally, the cost of storing and drying potatoes rose significantly due to higher year-on-year (y-o-y) electricity costs. Consequently, some growers sold off supplies earlier in the season to combat higher drying and storage costs.
In the 2022/23 season, demand for free-buy packing supplies was muted as many supermarkets contracted a higher proportion of their requirements to limit exposure to volatile potato prices. Therefore, significant driving factors, including higher input costs, have not been fully reflected in higher retail pricing. According to market sources, contract prices, largely finalised in Q4 2022, have risen by 20%-30% across the EU for the 2023/24 marketing year (MY) to account for this. This could potentially result in higher retail prices when the 2023 crop is harvested.
In the absence of financial government support for farmers, the industry's profitability and sustainability are under threat, which could limit future investments and potentially lead to lower planted areas next season. There is a risk that in consecutive seasons some farmers will opt to grow alternative crops, such as cereal or oilseeds, to achieve higher returns.