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Article: COVID-19: Copa-Cogeca requests support for EU potato sector
01 May 2020
This article is taken from our IEG Vu platform dated
28/04/20.
In a letter addressed to the European Commission, the EU farming
associations have requested the introduction of temporary
exceptional measures to support the potato sector hit by the
pandemic.
The farming organisation asked for a financial support from
outside the CAP budget coupled with temporary exceptional support
measures for the potato sector, including:
a support measure for private storage of frozen French fries to
establish strategic stocks that are immediately accessible for
consumption within the EU and that can be exported once the
confinement measures have been lifted. Processors should agree to
certain conditions such as restarting their production lines at
maximum capacity;
a support measure of EUR70/tonne (USD75) plus EUR15/tonne for
clearance costs for withdrawal of ware potatoes earmarked for
livestock feed, ethanol or starch production;
a support measure for private storage and withdrawal of early
potatoes at around EUR150/tonne plus sorting, sizing, packaging and
transport costs by producer organisations like cooperatives.
In addition, potatoes should be included in the scope of the
Fund for European Aid to the Most Deprived (FEAD) and promoted in
schools' feeding schemes across Europe.
How the European potato industry is affected by the
Covid-19
In north-west Europe, where potato production is concentrated,
about 15 mln tonnes out of a total of 29 mln tonnes harvested
yearly goes for processing. There is an estimated surplus of
2.0-3.0 mln tonnes of potato available for alternative use as feed
for livestock, as starch or to generate energy. Starch outlets have
stopped operating and they have no intention of resuming their
activity in the near future. The resulting potato surplus will have
to be destroyed or used as fertiliser with an estimated loss of
EUR400 million (USD437 mln), a figure which does not include all
losses in added value generated by trade, processing, foodservice
and other channels. The forced closure of restaurants and
fast-foods worldwide has caused frozen French fries sales to come
almost completely to a halt. Many European processors have already
shut their lines or are processing at a reduced pace. Consequently,
it is difficult for farmers to fulfil their contractual delivery
obligations under the current circumstances, and there are no
buyers for non-contracted potatoes.
"Potato growers must postpone the deliveries for processing and
continue to bear the costs so as to guarantee good storage
conditions in order to preserve the quality of the ware potatoes
despite the fact that the loss of quality and weight will depend on
the upcoming weather conditions," the Copa-Cogeca explains in its
letter.
The increased demand for fresh potato cannot offset the losses
caused by the reduced sold volumes of processed product. Since the
start of the pandemic, the market value of potatoes has dropped
from EUR180/tonne to next to nothing as there are no exchanges on
the spot market. Harvesting of early potatoes will begin in the
coming weeks. Early potato growers are concerned that the market
for early potatoes may not be in balance due to the carry-over of
additional volume of ware potatoes on the fresh potato market and
if containment measures continue to be prolonged. There is a risk
of production surpluses and overlapping of potato markets
segments.
The two largest processors of frozen potatoes in the world are
Belgium and the Netherlands with 2.7 mln tonnes and 1.9 mln tonnes
of French fries exported globally in 2019. Industry organisations
in both countries have launched campaigns to encourage consumers to
eat more fries helping the industry to lower their stocks. The
Dutch government has also announced a EUR50 mln programme to
compensate growers.
