Belfast Telegraph

Soaring cost of potatoes heaps pressure on food processors

By Ryan McAleer

Food suppliers and processors in Northern Ireland could be heading for a clash with supermarkets over the soaring cost of potatoes.

One food processing firm told Business Telegraph the cost of buying potatoes to make its products had increased from £120 per tonne in 2017 to almost £300 per tonne this month.

Following one of the hottest summers on record, Europe is experiencing a shortage of vegetables, ending a traditional source of cheaper produce for many food processors here.

In the Republic some potato growers have reported that their crop is 25% down, with the rising cost of seed resulting in a dip in the volumes being planted. It's not just the volume that has dropped, the size of the potatoes is also much smaller.

The impact of the shortage is expected to become more pronounced through the winter months.

The latest data from the UK Agriculture and Horticulture Development Board shows wholesale prices of potatoes have already soared past last year's prices. The cost of grade one Maris Pipers rose from £150-170 per tonne in early November 2017 to £310-355 per tonne last week. King Edwards (grade one) have jumped from £135-150 per tonne last November to £305-350 per tonne this week.

UK-wide, the average price of washed carrots has increased from 32p/kg last November to 51p/kg this week. Parsnips rose from 81p/kg to £1.32/kg over the same period.

Stephen Polley of Marlin Retail, which owns eight John Dorys chip shops here, said the cost of its premium potato product sourced from England had increased by 25%.

But he said his English supplier has been forced to increase the cost of its bagged potato product by 100%.

He expects the situation to worsen in the new year, and said consumers are likely to see more price rises right across chip shop counters.

Angus Wilson, who runs well-known potato brand Wilsons Country in Craigavon, said the impact of the drought has left a shortfall of 15-20% across Europe. "Prices have doubled for some varieties."

He said that it is unclear whether the rising prices could in turn curb demand.

But he said processors may struggle to pass on the cost for their products.

"You try to pass on the costs if you can, but in a market like this, it's hard to pass on all of the pain."

Martin and Tracy Hamilton of Mash Direct run a 1,500-acre farm near Dundonald, which normally produces between 7,000-8,000 each year, solely for his own business.

"We have been very lucky. Obviously we have been affected by the drought, but we held on and held and didn't harvest for three to four weeks later than normal and let them grow on," said Mr Hamilton.

"We're lucky we live in Ireland, down in the south east of England, their crops were absolutely fried. You can see the increases in the price of potatoes on the supermarket shelves, it's plain for anybody to see, and for the likes of carrots and parsnips too."

Roy Lyttle, vice-chair of the Ulster Farmers' Union's vegetable committee, said growers have faced much higher costs for producing their crop. His company RL Produce sells mostly leeks to supermarkets. But he said the competition between supermarkets means they aren't keen to raise prices to suppliers.

"We would probably be as well off selling our produce into the open market as we would into the supermarkets at the moment. Most years it's the other way around."

One major local processor, who did not wish to be named, said his business is at "crisis point".

He revealed that he has lost customers and a considerable number of experienced European workers due the uncertainty over Brexit. Struggling to replace the staff, he said the surging cost of potatoes has only compounded his woes.

Belfast Telegraph

Weekly Business Digest Newsletter

This week's business news headlines, directly to your inbox every Tuesday.

Popular