Recovery in potato prices marred by high input costs

Although potato prices have on average been trading slightly higher than last year, this has not been enough to offset increases in production costs.

CEO of Potatoes SA, André Jooste, said it had been a difficult year for producers, due to a very large harvest, which was very close to the record harvest produced in 2015 in terms of volume.

“This [placed] pressure on prices,” he said.

In February, prices dipped below R35/10kg pocket compared with nearly R40/pocket in February 2017. Following some recovery, the price dropped to below R30/pocket in July and remained at that level throughout August, only starting to inch above the R30/pocket mark again in September.

By the second week of October, the average weekly price for all markets and all classes had recovered to just under R40/pocket.

Jooste said there had been some relief among producers about the recovery after harvesting in two of the three major production regions, the eastern Free State and western production regions, had come to an end, which left only producers in Limpopo to supply the markets at present.

“The fact that not all three [large] regions are in the market at the same time has brought some relief,” he said.

The biggest challenge for producers at the moment was that prices were not increasing at a sufficient rate to counteract increases in production costs. These included diesel, labour, chemicals and other requirements, which Jooste said made it seven to 10 times more expensive to produce a hectare of potatoes than a hectare of maize, for example.

Commenting about the industry as a whole, Jooste was upbeat about continued good demand for potatoes and said the industry had achieved record sales volumes in certain months.

“It is good for the industry that demand has remained so high despite the sluggish economy,” he said.

According to the Potatoes SA monthly market report, a new sales record was set in June and then broken again a month later in July when more than 11 million pockets of potatoes were sold. – Sabrina Dean

FW ARCHIVE LEFT:The high cost of production makes potatoes far more expensive to produce than maize, according to Potatoes SA.