Gran Bretaña: Potatoes one of the best bets for UK farmers

This year potato sowings will match last year’s low levels, which means growers are hopeful that the "balanced" market which has seen prices double over the past year, will continue.

Sowings at this level, by far the lowest on easily accessible data going back to 2005, raise hopes for a continuation of the improved market conditions for farmers, who suffered a plunge in prices as a bumper 5.75m tonne harvest two years ago boosted supplies.

The "required" drop in sowings last year, when output dropped to 5.4m tonnes, has led to "more balanced" supply and demand in the UK potato market, Produce Investments, owner of the Greenvale potato packing operation, and supplier to the likes of major UK supermarket chains, chief executive Angus Armstrong said.

’Reports of tight supplies’

Indeed, data from the AHDB bureau on UK potato stocks last week showed inventories down 350,000 tonnes year on year at a three-year low of 1.9m tonnes, as of the end of January.

The tighter market has been reflected in prices, which for free-buy potatoes – those not produced under contracts – stood at £171.81 a tonne as of last week, up £9.01 a tonne week on week and more than double the £83.68 a tonne at the same time last year.

"Since the start of the year and the free-buy price has risen £21.80 a tonne in the same period with continued reports of tight supplies and increased demand from packers," the AHDB said.

Indeed, potatoes have represented one of the best bets for UK farmers, who this month saw, for example, London wheat futures fall below £100 a tonne for the first time since 2009.

’Improved performance’

For Produce Investments, the "more balanced" UK potato market, and "relatively stable" conditions in the key retail market, "has resulted in an improved performance" in results terms, Mr Armstrong said.

The group reported a 37% increase to £3.43m in operating profits for the July-to-December half, on revenues down 3.0% at £78.5m, with margins also helped by capacity cuts, with the closure in 2014 of a plant in the West Midland, and in December of a facility in Kent the south east of England.

"In the half year to December, man hours per tonne [of potatoes] packed are better than last year by 13%," Mr Armstrong said.

However, a charge related to the closure of the Kent site dragged the group to an after-tax loss of £158,000 for the half year, compared with earnings of £1.54m a year before.

Source: agrimoney.com