August 18 2006, 11:40

Will potato price go down?

Past winter potato price jumped up to $0.78/kg in wholesale trade; it was an absolute record for many years in Ukraine. Our country is one of the largest producers and consumers of potato in Europe. In 2005 our country harvested 20% less potato than usual, according to evaluations of the Agricultural Marketing Project. Potato shortage on market stimulated the price jump; the situation was aggravated by impossibility to open storages during frosts which anyway injured stored potato.

Such situation let foreign shippers consider Ukraine as a new market. In particular, in the first half of 2006 Egypt supplied more than 10,000 tons of potato to our country.

High potato price made many producers think about extension of potato cultivation areas. However, it was not an easy task - cultivation areas could not be much extended because of expensive seed material. And, high price for seeds built up the risk of negative financial outcome if the price for potato is relatively low in season 2006/2007.

As a result, potato acreage has been increased but not so intensively as it seemed at first sight.

According to evaluations of the Agricultural Marketing Project (AMP), potato acreage increased 7-10% in 2006 comparing to the previous year. The production is expected to grow 20-25% in Ukraine. So, we hope that at least the production level of 2004 will be reached this year; still, potato harvest will probably be even greater.

How will potato price change in these circumstances? On one hand, at the present moment potato price somewhat exceeds the price observed at the same period of time past year. And, it is 2-2.5 times higher than in 2004. On the other hand, we can not precisely evaluate the future harvest; so vendors do not hurry to reduce the price. Moreover, the demand for potato remains quite stable.

Nevertheless, the experts forecast potato price to decrease and reach the minimum level late September-October. At that period of time the price won't be higher than in September-October 2005. We'll remind that in September-October 2005 the wholesale price for potato fluctuated within $0.19-0.25/kg. In February-June 2007 the specialists promise potato price to be significantly lower than the price observed at the same period of time in 2005.

"If this winter is not so frosty as the previous one, we forecast that the wholesale price for potato is not higher than $0.39-0.43/kg at the same period of time. There is a possibility that potato prices will go even lower" Maxim Yenchenko says, the Market Information Specialist of the Agricultural Marketing Project.

The more detailed forecast of potato price and production please read in "Agrooglyad: Vegetables and Fruits" journal in the second half of September 2006.