High yields could lead to deflated potato prices

claim: Growers may see bumper harvest outstrip demand

Potato growers face the prospect of deflated prices as a result of increased yields outstripping demand, claims Produce Investments.

The firm, which is the parent company of tattie giant Greenvale, said if harvest proceeds as it should, an increase in the planted area will see a gross crop yield that will exceed demand and therefore deflate raw material prices.

The comments came as the company released its final accounts for the year ended July 1, 2017.

Turnover at the firm, which has a packhouse at Duns and a seed office at Burrelton, Perthshire, was up 8% to £200.13 million, from £185.102 million previously.

Pre-tax profits were also up by 88% to £6.578 million, from £3.496 million in the year before.

Chief executive Angus Armstrong said diversification, investment, new business gains and strengthened customer relationships had helped the group overcome the “significant challenges” posed by rising raw material costs and continuing intense price competition in the UK retail market place.

He said the group’s core potato business, which accounted for 78% of turnover, traded successfully through a less stable year, characterised by lower crop yields resulting in higher raw material costs and retail price deflation.

“Our potato processing business has continued its recovery, benefiting from a new management structure and an ongoing focus on improved processes and efficiencies,” added Mr Armstrong.

Looking ahead to the current season, Mr Armstrong said the 2017 crop could yield as much as 9% more than in 2016 at 5.7 million tonnes.

“This would usually indicate that we will have a season with more moderate raw material pricing compared with the season 2016/2017,” he added.

Produce Investments say gross crop yield is likely to exceed demand and hit raw material prices.