The UK’s £1bn potato growing sector has been hit so hard by extreme weather and coronavirus that its largest customer is stepping in with £25m of support to secure its supply chain.
Canadian company McCain, which makes frozen chips and other potato products for UK retailers, restaurants and chip shops, will invest £10m this year and another £15m over the next four years to help growers overcome hits to supply and demand, and risks linked to Brexit.
The move follows droughts in 2018 followed by flooding in 2019, which hurt yields. The pain was compounded by lockdown and the closure of restaurants and fast food outlets, which left a potato surplus of almost 200,000 tonnes in March, putting pressure on prices.
Alex Godfrey, a grower in north Lincolnshire and chair of the National Farmers’ Union potato forum, said potato prices varied widely by breed and buyer.
But he added: “I was hearing stories of people selling potatoes for well over £200 to £300 a tonne immediately prior to lockdown. Then they saw £100 to £150 a tonne come off that price. It’s recovered a bit but not very much.”
Some customers had supported growers by “behaving in a very responsible way [and] honouring contracts”, Mr Godfrey said. But he warned: “It is my fear that there are good solid businesses that won’t be able to survive this. It is certainly possible that people will move into other crops.”
Potato growers’ woes echo those of dairy and meat producers, who are also struggling with abrupt swings in consumer demand in the pandemic.
The hardest hit growers have been those who sell in the spot market rather than under contract, such as those selling for “fresh chipping” on the premises of food outlets.
McCain, which buys about 15 per cent of the UK’s annual potato crop, normally has one-year contracts with growers. But as part of the £25m investment it will put in place a three-to-five-year loyalty scheme so farmers can be assured of their market.
It will pay higher prices for early varieties and will offer grants for investment in harvesting capacity, including technology such as irrigation and harvesters that can handle very wet weather. Some 85 growers have applied for these.
McCain, the world’s largest potato processor, makes about £500m of UK-based annual turnover as part of its £5.75bn business.
“We really felt there was a need, through conversations with our growers, to ensure there was a sustainable supply chain going forward,” said Howard Snape, regional president at McCain UK and Ireland.
He linked the recent poor harvests, among the worst in the past four decades, with climate change. This was the first such scheme for McCain “but I think this is the first one of many as we are looking at climatic changes”, he added.
The conclusion of the Brexit transition at the end of 2020 will bring further challenges such as subsidy changes, said Mr Snape. “If European potato suppliers have a greater level of government support [than in the UK], that would not create a level playing field.”
The UK grows about 5m to 6m tonnes of potatoes a year, mainly for domestic consumption.
Andrew Curtis, director-general at the Potato Processors’ Association, said that when restaurants shut down, processors diverted some potatoes into supermarkets, but that did not compensate for their losses.
Some growers were forced to sell potatoes cheaply for animal feed, while also donating to food banks.
“The number of fast food outlets that are open is still a lot lower than at the start of the year, and the footfall is not there either,” he said.
While “lots of other [processors] are doing similar activities [to McCain] . . . working at a local level with their growers”, he called on the government to help by approving chemicals used in potato storage.
Nigel Adams, who grows potatoes in south Staffordshire, said he had secured a five-year deal with McCain.
“It’s still uncertain times . . . when you are purchasing machinery over a three to five-year period, you’d be more concerned about making that commitment if you didn’t have an end user for your crop,” he said.
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August 12, 2020 at 06:03AM
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McCain steps in to support UK’s potato industry - Financial Times
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