The 2011 potato season benefited from one of the warmest springs in a century. But while Scotland suffered rainfall of 50 per cent above average, England was unusually dry, obliging many growers to irrigate ahead of harvest. Although cropped area was down by 0.4 per cent on 2010, yields were up by 3.5 per cent. This season's prices have held steadily below those in 2010-11, however.
According to Potato Council director Dr Rob Clayton: "The average price across all markets last year was about £115 a tonne, but costs were £125-£150, so potatoes are being traded at below the cost of production. On that basis it looks difficult and we can expect a grower response this season."
Potato Council data shows that changes in planted area one season are to a high degree (75 per cent) dependent on the previous season's prices. However, last year's plantings were lower than would have been expected on the basis of 2010's relatively high prices, suggesting that the high price of wheat also played a part.
Clayton adds: "We have projected a 5.5 per cent increase in grower costs for 2012. There is pressure on rent - we are competing with a very buoyant cereals market, so getting hold of good land becomes harder."
A study co-authored by Jay Wootton of farm business consultancy Andersons has arrived at a projected figure for production costs this year of £132 per tonne, or £157 including rental and finance.
"There is a relentless increase in variable costs," says Wootton. "The price of fertiliser hasn't yet got back up to the spike in 2009, but phosphorus and potassium will go on getting more expensive. Productivity per pound is becoming an issue and growers should consider whether they are renting the right land. Cheap land isn't necessarily good value and fields that yield badly need to be thought about."
Compounding the cost pressures on growers is the abolition of the Agricultural Wages Board, adds Wootton. "We don't know what a free market in labour, subject to the national minimum wage, will do," he says, while continuing uncertainty over the euro and Common Agricultural Policy reform further cloud the outlook.
He also points out that there has been a "staggering" increase of around 35 per cent in machinery costs over the past five years, adding: "The industry hasn't invested in equipment, compared with the previous five."
Clayton notes: "The challenge is to ensure that all players are able to invest in sustainable technology. But that doesn't mean that bigger is necessarily better - businesses can get too big." He points to collective storage as an example of how smaller growers can achieve economies of scale. "Together they only need to pay for one store manager," he points out.
Nor does large-scale investment necessarily pay off. "A number of players have invested in reservoirs that are well short of full," he says. This may turn out to be a major issue in the year ahead for what is a relatively water-dependent crop. At present, only just over half of growers have access to irrigation.
Another pressure is the decline in the home consumer market. The Potato Council's Divisional Plan 2012-15 concedes: "The overall long-term trend is downward as younger consumers are eating fewer potatoes than their parents."
But the council's head of marketing Caroline Evans says the recession is not necessarily bad for the potato category. "People are cooking at home more. They want practical foods and potatoes tick all the boxes, being easy to cook, filling and cheap. But brands with a strong provenance story, such as premium crisps, are also doing well."
She attributes a slight drop in the volume of fresh sales to customers switching to smaller bag sizes, and taking care to use the whole bag. Nonetheless, she adds: "Potatoes are not a price-sensitive category."
A clear consequence of the economic climate has been a decline in the catering sector, with only quick-service restaurants showing slight growth. "Chips are the number-one item through this channel," she says.
"McDonald's has shown good growth throughout the recession and it is switching to British and Irish produce - it has committed to using Red Tractor 'where possible'. But times are hard for chip shops, which account for 13 per cent of UK potato supply."
Clayton adds: "We need to work together as an industry to look at value rather than price. We can come out positively if we can provide the quality - the supply chain and some retailers are starting to recognise the opportunity there."
The sustainability message can work to the potato sector's advantage, says Clayton. "If you compare things like water use, carbon footprint and biodiversity against rice and pasta and also against imported potatoes, we come up very well.
"These are all things that come up in retailers' corporate social responsibility reports. Potatoes are not just nutritious, they are sustainable too, and we can now show this to Government departments and to other stakeholders."
He says growers should find the time to assess their sustainability in the year ahead: "First, take stock of the good work that's already been done. We have come a long way - yields are higher than 20 years ago despite using a lot less input."
The council's Cool Farm Tool application can then help growers perform a sustainability audit, he adds. "This will give them an idea what's coming down the line from buyers and may highlight quick fixes such as adjusting energy use in their store, or even a change in fertiliser supplier."
Marketing and research are the two biggest areas of expenditure from the council's £6m budget, raised by industry levy. Research concentrates on mitigating pest and disease threats, improving energy efficiency and sustainability, and in the case of the council's specialist Sutton Bridge facility, improving storage.
"My aim is to have an organisation that's highly visible and highly trusted, which means getting out in front of levy payers - they should know what we're doing and why," says Clayton.
The top priority for research and development in a recent poll came out as the potato cyst nematode (PCN) - clearly a recurrent headache for growers as crop protection products are restricted and buyers' residue requirements grow tighter.
Pat Haydock of the Crop & Environmental Research Centre at Harper Adams University College says: "2011 appears to have been a bad year for nematicide residues in crops". He suggests low soil moisture at planting as a cause and points out that one major retailer has set a target of zero residues in its produce by 2020.
All nematicides for the control of PCN are coming up for review, he says. "The EU's switch from riskto hazard-based assessment is already affecting the availability of herbicides."
And Clayton, who holds a doctorate in plant pathology, says there may be worse to come. "We need to recognise the threat from exotic pests and diseases and to have a response ready that fits behind that of the Government."
The Epitrix flea beetle, a New World pest already established in Portugal, is of particular concern, says Science & Advice for Scottish Agriculture potato quarantine unit head Colin Jeffries. "If Epitrix established in the UK it would be impossible to eradicate and could cost the industry £10-£41m, or a four-to-16 per cent reduction in gross margin."
He adds that the imperfectly understood zebra chip disease, which causes dark stripes on potato crisps, has already caused substantial losses in the USA, New Zealand and eastern Europe. A quarantine test for one candidate pathogen was introduced in the UK in 2010, but he adds that the earliest action by the EU will be later this year, following anticipated approval of a European & Mediterranean Plant Protection Organisation pestrisk analysis in summer.
Jeffries urges growers: "Choose your seed with care," and recommends the Potato Council's Safe Haven certification scheme.
Indeed the seed market, which accounts for 40 per cent of Scottish plantings, could be described as the bright spot of the UK industry, with overseas sales now topping 100,000 tonnes a year. "There are strong opportunities in countries such as Egypt," says Clayton.
Meanwhile, the council is surveying home growers on their seed use. "We want to get a handle on the quality, customer service and value they are getting from their suppliers."
- Potato production in the UK has been remarkably stable over the past half-century, at around six-million tonnes a year. However, yields per hectare have doubled in that time, from 23t/ha in 1960 to more than 46t/ha in 2009.
- While the hectarage halved in that time, the number of growers has dropped more sharply, from more than 70,000 in 1960 to just under 2,500 today.
- Consolidation means that 12 per cent of growers farm more than 100ha, accounting for half the total farmed area - compared with just three per cent 15 years ago.
- Total farm gate sales value is £947m, giving an average turnover per grower of £376,000.
- Around a third of production is on rented land.
- Nearly three-quarters of the UK crop is grown on a pre-season contract or for a committed buyer.
- A wide range of varieties continues to be grown. While Maris Piper accounts for 16 per cent of hectarage, no other variety accounts for more than six per cent.